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Centralization, deconcentration, and decentralization are concepts that describe different forms of administrative organization. Administrative deconcentration is the transfer of competences, or administrative powers, within the same institution; administrative decentralization is the transfer of competences between institutions with political and administrative autonomy. While centralization, or the concentration of power within the central government, answers the need of national unity, deconcentration and decentralization are two different ways to address sociogeographical diversity inside the country.
Most state structures include one or more subnational levels of administration, but states differ from each other in the way administrative powers are organized and in the degree of centralization of decision making. In recent decades, in most parts of the world, the move from traditional hierarchical forms of administration to forms of administration through the networks of alternative public and private organizations has reinforced previous trends towards deconcentration and decentralization.
Deconcentration is the transfer of competences or administrative powers between organizations inside the same entity, such as the state or municipalities. Taking the example of the state, deconcentration is the transfer of competences from central government entities or departments—those that have a jurisdiction over the entire national territory—to peripheral government entities, which have jurisdiction only over a part of the national territory. The central level retains the most important keys in the decision-making process, but its organs in the lower tiers may make decisions on less important issues. This is the case, for example, of central government departments in charge of the road network. They are responsible for the overall strategy and main decisions concerning planning and construction, while its regional departments are only in charge of road maintenance and implementation of decisions taken by the central department. Deconcentration only concerns entities inside the state. The state’s aim with deconcentration is to bring public services closer to citizens without losing control of the decisions and resources applied by regional or local state departments.
In some cases, deconcentration can be used as a first step in a decentralization process, for example, when the state creates a regional tier where it didn’t exist before. In such a case, the strategy can be to gradually deconcentrate those powers and resources—intended for transfer to the future regional self-government—to the regional departments of central government. In a second step, the new administrative tier is created and elections are held for its boards. In addition, other central government departments may also deconcentrate to peripheral regional departments; their competences will not be decentralized to the newly created regional government, for example, but will have advantages in being geographically organized according to the same area and boundaries. Any central government department can be in this situation. Part of their competences will be transferred to the newly created form of regional government and part of the remaining competences can be deconcentrated to its regional offices.
Decentralization is the transference of competences between different entities. It connotes the transfer of responsibilities, powers, and resources, from higher to lower level units of self-government and the direct management of local affairs by local populations through their elected local or regional representatives. The reasons to decentralize, the degree of decentralization, the number of administrative competences, and the amount of public resources assigned to local and regional governments vary from country to country. In most countries, administrative decentralization is done for a combination of political, economic, and social reasons—different from case to case. In some cases, the need to recognize and to respect political and cultural differences can lead to adopting forms of administrative or political decentralization (e.g., the creation of autonomous regions in Spain). In other cases, the specific geographical situation may require adopting these forms of decentralization (e.g., the case of islands or metropolitan areas).
Decentralization increases the opportunities for citizens to participate in local or regional public affairs, offering new conditions for participation and for public-private partnership, therefore reinforcing the involvement of local civil society in the management of its own affairs. With increased participation and with direct election of local or regional representatives, decentralization improves political accountability and increases transparency in public-policy decision making. Decentralization tends to increase institutional capacity and local empowerment, making local governments and local communities more competent to deal with their own affairs. As a consequence, administrative decentralization is thought to increase public service efficiency and responsiveness, and to achieve a better adjustment between citizens’ preferences and public services. However, the number of administrative units or institutional fragmentation affect efficiency and responsiveness, since, for example, an excessive number of small units can be detrimental for the achievement of scale economies. On the other hand, large units may affect the relation between citizens and administrators and therefore the responsiveness of the regional government. Finally, decentralization may also allow local communities to counterweight decisions taken by the central government on issues likely to affect their local or regional well-being.
Decentralization processes may also have negative consequences. For example, decentralization can be responsible, in specific contexts, for macroeconomic instability, since the efforts made by the central government to reduce public sector expenditures or to increase public revenues may not be followed by similar efforts at the regional and local levels of self-government. Decentralization can also produce inequity in the amount and quality of public services delivered, according to the area of residence, in comparison with a situation in which the same services are delivered by central government based on common standards independent from the geographical location.
Centralization and decentralization have alternated as political and administrative models for the vertical organization of the state throughout the history of public administration. In the three decades after the end of World War II (1939–1945), administrative deconcentration prevailed in most industrialized countries as the preferred mechanism for the vertical organization of the state. In that period, there was strong state intervention with little or no delegation of powers and resources to entities outside the direct control of central government departments. However, in the 1980s and 1990s, the renewal and the dominance of the free market ideology on both sides of the Atlantic, as well as political demands for more public participation in decision making, led to reforms in the vertical organization of the state, which in part explains the general move toward political and administrative decentralization. Political changes from the 1990s onward consolidated political and administrative decentralization as the model for the organization of democratic states. Decentralization was seen, at the same time, as the best way for public administration to deal with the emerging forms of multilevel and multifactor governance, as the example of several member states of the European Union illustrates well.
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