DECENTRALIZATION:AN OVERVIEW DENNIS A. RONDINELLI Kenan Institute of Private Enterprise...

DECENTRALIZATION:AN OVERVIEW

DENNIS A. RONDINELLIKenan Institute of Private Enterprise

Kenan-Flagler Business SchoolUNIVERSITY OF NORTH CAROLINA, CHAPEL HILL,

N.C. 27599-3440

[email protected]

DECENTRALIZATION

TRANSFER OF AUTHORITY AND RESPONSIBILITY FOR PUBLIC FUNCTIONS >FROM A HIGHER LEVEL OF (CENTRAL) GOVERNMENT TO SUBORDINATE OR QUASI-INDEPENDENT GOVERNMENT ORGANIZATIONS , OR >FROM GOVERNMENT TO NONGOVERNMENT ORGANIZATIONS OR THE PRIVATE SECTOR

DENNIS A. RONDINELLI, UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL

1. ASSESSMENT OF GOALS AND OBJECTIVES

2. ASSESSMENT OF CONCEPTS AND APPROACHES TO DECENTRALIZATION

3. PRELIMINARY ANALYSIS OF POLITICAL SUPPORT--STAKEHOLDER ANALYSIS

5. ASSESSMENT OF ORGANIZATIONAL ALTERNATIVES

4. ANALYSIS OF EXISTING INSTITUTIONAL STRUCTURE

6. ASSESSMENT OF FINANCIAL OPTIONS

7. SELECTION OF FEASIBLE DECENTRALIZATION OPTIONS

8. DEVELOPMENT OF DECENTRALIZATION IMPLEMENTATION STRATEGY

DECENTRALIZATION ASSESSMENT FRAMEWORK


REASONS FOR DECENTRALIZING

> IDEOLOGICAL

--DISTRUST OR LACK OF CONFIDENCE IN CENTRAL GOVERNMENT

--BELIEF IN VALUE OF INDIVIDUAL AND LOCAL RESPONSIBILITY AND AUTONOMY

--REACTION AGAINST CENTRALIST OR AUTHORITARIANFORMS OF GOVERNMENT

> POLITICAL

--AUTONOMY OR REPRESENTATION

--DEMOCRATIZATION (POLITICAL PARTICIPATION)

--CENTRAL GOVERNMENT OFF-LOADING OF EXPENSIVE OR POLITICALLY TROUBLESOME FUNCTIONSDENNIS A. RONDINELLI, UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL


> MORE EFFICIENT AND EFFECTIVE PROVISION OF PUBLIC SERVICES AND INFRASTRUCTURE

--OPTIMIZING HIERARCHY OF SERVICE DELIVERY

--TAILORING SERVICES TO LOCAL NEEDS AND CONDITIONS

--IMPROVING INFRASTRUCTURE MAINTENANCE

--RELIEVING CENTRAL GOVT. OF ROUTINE FUNCTIONS TO CONCENTRATE ON POLICY

--INCREASING “COMPETITIVENESS” IN SERVICE PROVISION

(AMONG GOVERNMENT UNITS & BETWEEN PUBLIC AND PRIVATE SECTORS)

--MAKE BUREAUCRACIES MORE CUSTOMER ORIENTED



> CHANGING GLOBAL REQUIREMENTS FOR LOCAL AND REGIONAL ECONOMIC DEVELOPMENT

--GROWING IMPORTANCE OF GLOBAL TRENDS IN SHAPING NATIONAL AND SUB-NATIONAL ECONOMIC DEVELOPMENT

-- IMPORTANCE OF “LOCATION-SPECIFIC ASSETS” IN ATTRACTING AND NURTURING ENTERPRISES

> EQUITY

--PROVIDE RESOURCES AND AUTHORITY FOR PURSUING LOCAL PRIORITIES AND NEEDS

--PROVIDE OPPORTUNITY FOR ALL JURISDICTIONS TO MAKE OWN DECISIONS


NATIONALECONOMIC DEVELOPMENT

GLOBAL ECONOMICINTERACTION

REGIONALIZATIONOF WORLD TRADE

GROWINGSIMILARITIES INPRODUCTIONCAPABILITIES

LOCAL ANDREGIONAL DEVELOPMENT

GROWTH OF WORLDTRADE ANDINVESTMENT

MOBILITY OF FACTORSOF PRODUCTION

INCREASINGIMPORTANCE OFSERVICE SECTOR

DRIVING FORCE OFTECHNOLOGY

EMERGENCE OFKNOWLEDGE INDUSTRIES

NEED FOR GLOBALSTRATEGIC ALLIANCES

NEED FOR AGILEBUSINESS PRACTICES

CRUCIAL ROLE OFMARKET SIZE

GLOBAL FACTORS AFFECTING LOCAL AND REGIONALECONOMIC DEVELOPMENT

FIRMCOMPETITIVENESS


POTENTIAL DISADVANTAGES OF DECENTRALIZATION

> POSSIBLE MACROECONOMIC INSTABILITY

> INEFFICIENCIES IN HIGHLY STANDARDIZED FUNCTIONS

> LOSS OF ECONOMIES OF SCALE

> DETERIORATION IN SERVICE QUALITY AND DELIVERY IF LOCAL ADMINISTRATION WEAK

>LOCAL ELITES OR INTEREST GROUPS MAY CAPTURE CONTROL

>REDUCES ABILITY OF CENTRAL GOVERNMENT TO CONTROL OR COORDINATE

>NEW TYPES OF INEQUITIES












POLITICALDECENTRALIZATION

ADMINISTRATIVEDECENTRALIZATION

ECONOMICDECENTRALIZATION

FISCALDECENTRALIZATION

FORMS OF DECENTRALIZATION

DEMOCRATIZATION

REPRESENTATIVEDECISION MAKING

DEREGULATION

PRIVATIZATION

CORPORATIZATION

DECONCENTRATION

DELEGATION

DEVOLUTION

Dennis A. Rondinelli, University of North Carolina at Chapel Hill

REVENUE RAISINGAUTHORITY

EXPENDITUREAUTHORITY

TRANSFERS

AUTONOMY

FORMS OF POLITICAL DECENTRALIZATION

> FEDERALISM

> REGIONAL AUTONOMY (CONFEDERATION)

> MORE REPRESENTATIVE DECISIONMAKING

> PARTICIPATORY DEMOCRACY(EXPANSION OF ELECTORAL PARTICIPATION)

> DELEGATION OF POLITICAL DECISION-MAKING AUTHORITY

> POLITICAL PARTY PLURALISM

> DIVISION OF POWERS AMONG GOVERNANCE INSTITUTIONS (LEGISLATURE, JUDICIARY, EXECUTIVE)


ADMINISTRATIVE DECENTRALIZATION

DECONCENTRATION DELEGATION DEVOLUTION

SHIFT OF WORKLOAD

FIELD ADMINISTRATION

LOCAL ADMINISTRATION

SPECIAL AUTHORITIES

REGIONAL DEVELOPMENT CORPORATIONS

FUNCTIONAL AUTHORITIES

PUBLIC CORPORATIONS

STATES

REGIONAL JURISDICTIONS

PROVINCES

DISTRICTS

MUNICIPALITIES

CITIES


METHODS OFPRIVATIZATION& ENTERPRISERESTRUCTURING

TRANSFER OF OWNERSHIP

SOE RESTRUCTURING

TRANSFER OF MANAGEMENT

DELEGATION OF RESPONSIBILITY

RESTITUTION

AUCTIONS

DIVESTITURE

CONTRACTING

PUBLIC- PRIVATE PARTNERSHIPS

STATE GUARANTEES ORINCENTIVES

REPRIVATIZATIONCOMPENSATION

ENGLISH AUCTIONSDUTCH AUCTIONSFIRST OR DISCRIM. PRICING AUCTIONSSECOND OR UNIFORM PRICING AUCTIONSDOUBLE AUCTIONSPRO-RATA AUCTIONS

PRIVATE OR TRADE SALEPUBLIC OFFERING ON STOCK EXCHANGELIQUIDATION OR BANKRUPTCYMANAGEMENT AND EMPLOYEE BUY-OUTSFREE OR LOW-COST VOUCHER DISTRIB.

JOINT STOCK COMPANYCOMMERCIALIZATIONDEMONOPOLIZATIONUNBUNDLING

SERVICE CONTRACTSMANAGEMENT CONTRACTSLEASE CONTRACTS

PUBLIC-PRIVATE JOINT VENTURESBUILD-OPERATE-TRANSFER AGREEMENTSJOINT INVESTMENTPUBLIC-PRIVATE COOPERATION

PUBLIC MANDATED OR REGULATED REQUIREMENTSMERCHANT FACILITIESDEVELOPER PROVISION OR FINANCINGPRIVATE SECTOR INVESTMENT

Dennis A. Rondinelli, University of North Carolina-Chapel Hill

ALTERNATIVE METHODS OF PRIVATIZATION

> At outset, articulate type ofdecentralization beingproposed – political,administrative, fiscal,economic

> Assess crucial relationshipsbetween proposed type andothers

> Political discourse likelyto be more focused andinformed if advocatesmake clear type ofdecentralization beingadvocated

ADMINISTRATIVEdecentralization












STAKEHOLDERS ANALYSIS

ORGANIZATION

THOSE WHO OPPOSECHANGE

THOSE WHO ARENEUTRAL BUTCAN BEINFLUENCED

THOSE WHOARE LOWPRIORITY BUTNEED TO BEMANAGED

THOSE WHO SUPPORT CHANGE


POTENTIAL STAKEHOLDERS IN DECENTRALIZATION

DECENTRALIZATION PROPOSALS

NATIONAL POLITICAL LEADERS

NATIONAL CIVIL SERVANTS

LOCAL GOVERNMENT OFFICIALS

LABOR UNIONS

NONGOVERNMENTAL ORGANIZATIONS

COMMUNITY LEADERS

BUSINESS LEADERS

INTERNATIONAL ASSISTANCE ORGANIZATIONS


IDENTIFYING RELEVANT POLITICALSTAKEHOLDERS IN DECENTRALIZATION

GUAGE WILLINGNESS OF POWERFULSTAKEHOLDERS TO SUPPORT WIDERPARTICIPATION IN TRANSFERING ANDSPENDING REVENUES AND DELIVERINGSERVICES


> ADVOCATES MUST IDENTIFY AND ASSESSTHE POLITICAL MOTIVATIONS OF THOSESUPPORTING AND OPPOSINGDECENTRALIZATION--

even those in same coalitions often have diverse andpotentially conflicting objectives

> SUCCESS DEPENDS ON FINDING WAYS OFRECONCILING STAKEHOLDER INTERESTSAND FORGING MUTUALLY BENEFICIALLINKAGES AMONG THEM












NATIONAL INSTITUTIONAL ASSESSMENT

>FUNCTIONS OR RESPONSIBILITIES OF NATIONAL MINISTRIES

>LEGISLATIVE OR CONSTITUTIONAL PROVISIONS AFFECTING DISTRIBUTION OF GOVERNMENT RESPONSIBILITIES

>SPAN AND SCOPE OF AUTHORITY OF NATIONAL AGENCIES OVER SUBORDINATE UNITS OF ADMINISTRATION

>CAPACITY OF NATIONAL AGENCIES TO PERFORM FUNCTIONS EFFECTIVELY, EFFICIENTLY, EQUITABLY AND ACCOUNTABLY

>SPECIFIC CONSTRAINTS OR LIMITATIONS ON NATIONAL MINISTRIES IN CARRYING OUT THEIR FUNCTIONS

>REASONS FOR PERFORMANCE GAPS IN NATIONAL MINISTRIES’ ABILITY TO CARRY OUT RESPONSIBILITIES (INTERNAL/EXTERNAL)

>CONSEQUENCES OF CONTINUED CENTRALIZATION OF RESPONSIBILITY AT NATIONAL LEVEL

>OPTIONS FOR IMPROVING CENTRAL MINISTRY PERFORMANCE


LOCAL LEVEL INSTITUTIONAL ASSESSMENT

> STRUCTURE AND ORGANIZATION OF LOCAL INSTITUTIONS

> RESPONSIBILITIES AND FUNCTIONS OF LOCAL INSTITUTIONS

> ADMINISTRATIVE AND FINANCIAL RELATIONSHIPS BETWEEN LOCAL AND NATIONAL INSTITUTIONS

> FISCAL CAPACITY OF LOCAL INSTITUTIONS (REVENUE RAISING AND EXPENDITURE)

> ADMINISTRATIVE CAPACITY OF LOCAL INSTITUTIONS (PLANNING, BUDGETING, MANAGEMENT, SERVICE DELIVERY, MAINTENANCE, ETC.)

> ACCOUNTABILITY, ACCESSIBILITY AND “CUSTOMER ORIENTATION” OF LOCAL INSTITUTIONS

> REASONS FOR PERFORMANCE GAPS IN LOCAL INSTITUTIONS

> OPTIONS FOR IMPROVING LOCAL INSTITUTIONAL PERFORMANCE

> CAPACITY TO TAKE ON ADDITIONAL RESPONSIBILITIES/FUNCTIONSDENNIS A. RONDINELLI, UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL











POLITICALDECENTRALIZATION

ADMINISTRATIVEDECENTRALIZATION

ECONOMICDECENTRALIZATION

FISCALDECENTRALIZATION

FORMS OF DECENTRALIZATION

DEMOCRATIZATION

REPRESENTATIVEDECISION MAKING

DEREGULATION

PRIVATIZATION

CORPORATIZATION

DECONCENTRATION

DELEGATION

DEVOLUTION


REVENUE RAISINGAUTHORITY

EXPENDITUREAUTHORITY

TRANSFERS

AUTONOMY

ORGANIZATIONAL OPTIONS

PUBLIC ---------------------------------------------------------------------------PRIVATECENTRAL MINISTRIES

FIELD AGENCIES OF CENTRAL GOVERNMENT

REGIONAL OR PROVINCIAL GOVERNMENTS

LOCAL GOVERNMENTS

PUBLIC CORPORATIONS

SPECIAL AUTHORITIES

PUBLIC-PRIVATE PARTNERSHIPS

PUBLIC CONTRACTING

NONGOVT. ORGANIZATIONS

COOPERATIVES

NONPROFIT ORGANIZATIONS

“REGULATED INDUSTRIES”

PRIVATE FIRMS

INDIVIDUALS

“QUASI-MARKET” PROGRAMS (VOUCHERS)












ASSESSING FINANCIAL OPTIONS

DECENTRALIZED RESPONSIBILITIES

A

B

C

D

E

F

INTERGOVERNMENTAL TRANSFERS

CO-FINANCING

USER CHARGES

LOCAL REVENUES

BORROWING

CONTRIBUTIONS












FACTORS SUPPORTING IMPLEMENTATION OF DECENTRALIZATION

POLITICAL FACTORS

> STRONG POLITICAL COMMITMENT AND SUPPORT FROM NATIONAL POLITICAL LEADERS

> SUPPORT (OR LACK OF OPPOSITION) TO DECENTRALIZATION BY NATIONAL AGENCIES

> ACCEPTANCE BY POLITICAL LEADERS OF LOCAL OR NONGOVERNMENTAL PARTICIPATION

> EFFECTIVE CHANNELS OF CITIZEN PARTICIPATION AND REPRESENTATION


ORGANIZATIONAL AND ADMINSTRATIVE FACTORS

> CENTRAL GOVT. CAPACITY TO SUPPORT LOCAL UNITS

> APPROPRIATE ALLOCATION OF FUNCTIONS BETWEEN CENTRAL AND LOCAL GOVERNMENTS

> TRANSPARENT AND DEFINITIVE DECENTRALIZATION LAWS, REGULATIONS, DIRECTIVES

> ARRANGEMENTS FOR RE-ALLOCATING RESPONSIBILITIES BASED ON PERFORMANCE

> CLEARLY DEFINED ADMINISTRATIVE PROCEDURES FOR LOCAL OFFICIALS

> CHANNELS FOR CITIZEN PARTICIPATION OR REPRESENTATION AT LOCAL LEVELS




BEHAVIORAL FACTORS

> FAVORABLE ATTITUDES OF CENTRAL GOVERNMENT OFFICIALS TOWARD LOCAL PARTICIPATION

> SUFFICIENT LEVEL OF TRUST BETWEEN CENTRAL AND LOCAL OFFICIALS

> EFFECTIVE MEANS OF OVERCOMING RESISTANCE OR ELICITING SUPPORT OF LOCAL LEADERS

> STRONG LEADERSHIP IN LOCAL ADMINISTRATIVE UNITS AND NONGOVERNMENTAL ORGANIZATIONS



RESOURCE FACTORS

> TRANSFER OF SUFFICIENT LEGAL AUTHORITY TO CARRY OUT DECENTRALIZED RESPONSIBILITIES

> ADEQUATE TRANSFER OF FINANCIAL RESOURCES OR REVENUE RAISING AUTHORITY

> ADEQUATE TRAINING AND ADMINISTRATIVE DEVELOPMENT PROGRAMS TO BUILD INSTITUTIONAL CAPACITY AT LOCAL LEVELS

> SUFFICIENT ORGANIZATIONAL AND PHYSICAL INFRASTRUCTURE AT LOCAL LEVELS TO CARRY OUT FUNCTIONS












“GUIDELINES” FOR IMPLEMENTATION

> BEGIN WITH PILOT OR DEMONSTRATION PROGRAMS

> EXPAND GRADUALLY (OVER TIME AND UNITS OF ORGANIZATION BASED ON PERFORMANCE CRITERIA)

> KEEP PROCEDURES, PROCESSES, REQUIREMENTS, AND RULES SIMPLE AND FLEXIBLE

> PLAN FOR THE LONG-TERM --ORGANIZATIONAL AND INSTITUTIONAL CHANGE IS SLOW


Down withdecentralization!

POLITICAL SUPPORT WANES OR TURNSTO OPPOSITION IF DECENTRALIZATIONIS TOO SLOW TO TAKE HOLD OR DOESNOT DELIVER EXPECTED RESULTS



• DECENTRALIZATION DEPENDS ON BUILDING TRUST

• BETWEEN CENTRAL AND LOCAL LEVELS

• BETWEEN GOVERNMENT AND CIVIL SOCIETY ORGANIZATIONS AND

• BETWEEN PUBLIC AND PRIVATE SECTORS


IMPLEMENTING DECENTRALIZATION

POLITICALFEASIBILITY OFDECENTRALIZATIONCAN BE IMPROVED IFISSUES ARE FRAMEDAS “WIN-WIN”PROPOSITION



ULTIMATELY, DECENTRALIZATION IS AN EXERCISE IN INSTITUTIONAL AND HUMAN RESOURCE DEVELOPMENT

SUCCESS OF DECENTRALIZATION DEPENDS ON EXPANDING AND IMPROVING MANAGEMENT CAPACITY

MANAGEMENT IS A “PERFORMING ART” - capacity building depends on doing it.


Maintain strong political coalitions in support ofdecentralization by strengthening local administrativeand institutional capacity


ADVOCATES OF DECENTRALIZATIONMUST ASSURE CENTRAL GOVERNMENTAGENCIES THEY CONTINUE TO PLAYCRUCIAL ROLE IN ASSISTING LOCALGOVERNMENTS



• MECHANISMS MUST BE DEVELOPED TO ASSURE ACCOUNTABILITY, TRANSPARENCY, AND PUBLIC ACCESS TO INFORMATION

• NEED FOR SYSTEMS OF “CHECKS & BALANCES”












DECENTRALIZATION IS AN INSTRUMENT NOT A PANACEA OR AN END IN ITSELF

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DECENTRALIZATION:AN OVERVIEW DENNIS A. RONDINELLI Kenan Institute of Private Enterprise...

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