Managing Decentralization

The last two decades have seen an increasing number of decentralization reforms in developing and transitional countries in Africa, Asia, and Latin America. These reforms are mostly driven by political considerations (such as building political legitimacy following regime changes, reduction of interregional conflicts), although the objective of improving public services can be observed as well. Being "whole-of-government" reforms, decentralization efforts reconfigure power relationships between public sector institutions, and between the national level and subnational entities.

Implementing reforms requires substantial coordination horizontally, i.e., among the national-level government agencies involved; vertically, i.e., between national-level entities and subnational authorities; and increasingly between public sector actors (at national and subnational level) and actors in the private and nongovernment domains. Horizontal (national) policy coordination has to ascertain the alignment of sectors with the decentralization reforms, by means of functional assignments, structural and procedural reforms at national level, and the transfer of sectoral resources to subnational authorities. Policy coordination is furthermore essential to ensure that fiscal and civil service reforms establish the prerequisites for decentralization reforms to succeed.