More than ever, the future of East Asian countries depends on the capacity and performance of local and provincial governments, according to the World Bank report, East Asia Decentralizes.

This decentralization has also unleashed local initiative and energy, with new ways to deliver services to people. With great potential for continued improvement and innovation, finds the report, it is essential that decentralization is done right.

The report, which focuses on six countries, notes the differences in the approach to decentralizing government in Cambodia, China, Indonesia, the Philippines, Thailand, and Vietnam. Despite encouraging progress, fundamental problems remain. Across the region, local governments lack the resources and power to fulfill their new responsibilities, and they have few incentives to improve their performance.

Country Overviews

Cambodia   China   Indonesia   Philippines   Thailand   Vietnam

Resources

Watch a Video Seminar on Decentralization in East Asia    Bank Homepage: Governance and Public-Sector Reform   Administrative and Civil Service Reform    Decentralization in other Regions:     Africa     Europe and Central Asia     Latin America     Middle East and Northern Africa     South Asia

The report suggests that while decentralizing countries need policies and strategies that are appropriate to their specific environments, policy makers can usefully focus on three key challenges.

• Improving the organization of the intergovernmental system: Subnational governments now have substantial responsibilities, but basic weaknesses in the systems that link the central, regional, and local governments limit their ability to fulfill these responsibilities.
• Strengthening local and intergovernmental fiscal and financial structures: Progress in this area has been the greatest in increasing the transfers from the central government to the local governments which make up most local government revenue. But these funds are not always distributed fairly, and local governments have few ways of raising money and even less control over funds they do raise.
• Developing the functional and accountability systems that make local governments work: Local governments often have flawed functional and financial management systems. Audits are rare, and central control over local staffing, budgets, and pay undermines attempts to devolve authority.