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Benefits and Challenges of Decentralization

Much of the decentralization which has taken place in the past decade has been motivated by political concerns. For example, in Latin America, decentralization has been an essential part of the democratization process as discredited autocratic central regimes are replaced by elected governments operating under new constitutions. However, there is also a strong rationale for decentralization in terms of economic efficiency, public accountability and empowerment. In the context of CDD, the major benefits of decentralization are:


  • Greater voice and choice of individual constituents to influence decisions which affect their lives, and of sub national and local governments to respond dynamically to constituency concerns.
  • Allocative Efficiency - Matching of local needs and preferences with patterns of local public expenditure (assumes substantial fiscal autonomy).
  • Empowerment of districts, villages, communities, and individual constituents

The underlying assumptions on which these potential benefits of decentralization rest include:

> Representative Elected Bodies -Each council member has a mandate to articulate needs of an identifiable constituency and can be held accountable to such
>Inclusive Local Decision-making - Decision-making that does not systematically exclude poorest, most vulnerable groups, specific social or ethnic groups.

Potential dangers and challenges of decentralization:

  • Elite capture
  • Corruption
  • Patronage politics
  • Local civil servants feel compromised
  • Impedes further decentralization
  • Incomplete information
  • Constituents not able to hold representatives accountable
  • Opaque decision-making affects accountability upwards and downwards
  • Rationalizes reform delays and central claw back of power

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