There is a vast difference between the purported benefits of decentralisation and its actual effects on service delivery, economic development and social cohesion. This analytical review, published by the Governance and Social Development Resource Centre, discusses the nature, extent and impact of decentralisation in developing countries. Decentralisation cannot be considered the solution to all local service delivery and economic development issues, and should not necessarily be standard policy in all development contexts.
Decentralisation is a highly political, context-specific activity. Reforms should ideally be preceded with political economy analysis to ensure their effectiveness. Sufficient empirical research has not yet been conducted to clarify links between decentralisation and service delivery, economic development or social cohesion.
Many claims are made in favour of decentralisation, including its democratising potential and its capacity to reduce poverty and improve service delivery. Decentralisation literature is replete with theoretical assumptions that it is of intrinsic value, automatically improves service delivery efficiency and fosters local economic development. However, these assumptions are not generally supported with empirical evidence. In particular, the literature is sharply divided on whether decentralisation mitigates or exacerbates conflict. Other main findings in the paper include:
- There is no substantial evidence that service delivery has generally improved under decentralisation. In most cases reported from Africa, Asia and Latin America, its quality has either declined or remained unchanged.
- Central governments often do not adopt decentralisation with the main aim being to improve service delivery to citizens. Instead, they pursue decentralisation because of donor pressure and/ or to strengthen their power base in rural areas.
- Local governments often lack the administrative and financial capacity to adequately manage or fund decentralisation reforms.
- To promote economic growth, local governments have few tools at their disposal. Instead they should focus attention on improving service delivery and infrastructure, which is critical for economic growth.
- Virtually all empirical country cases reviewed for this report were unable to conclude that decentralisation had positive effects on conflict.
- Decentralisation often only changes the nature of conflict from national to local; it does not necessarily exacerbate or remove the dynamics that encourage conflict.
The following policy implications are important given the widespread adoption of decentralisation across all types of developing country:
- Decentralisation will not solve all service delivery problems.
- Central government’s commitment to decentralisation is critical.
- Decentralisation can not be relied upon to generate economic development. Local governments can improve economic development by concentrating on service delivery.
- The impact of decentralisation on conflict and state fragility must be researched further.
- Political economy analysis is necessary to assess the impact of decentralisation on social cohesion.
- More research on this issue is necessary; in particular, large, cross-country, historically-oriented comparative studies.
