Decentralization and Local Governance

Lesson 1
Decentralization and Local Governance
Decentralization refers to the restructuring of authority so that there is a system of co-

responsibility between institutions of governance at the central, regional and local levels
according to the principle of subsidiarity.
Local Governance comprises a set of institutions, mechanisms and processes,

through which citizens and their groups can articulate their interests and needs,
mediate their differences and exercise their rights and obligations at the local level.
Centralization and Decentralization

All modern states are divided into a territorial basis between central (national and
peripheral (regional, provincial and local). These differences include the constitutional
framework within which centre-periphery relationships are conducted, the distributions of
functions and responsibilities between the levels of government, means by which their
personnel are appointed and recruited, the political, economic, administrative and other
powers that the center can use to control periphery and the independence that peripheral
bodies to enjoy.
Centralization includes the following:
1. National unity – central government alone articulates the interest of the whole
rather than the various parts, that is, the interest f the nation rather than those of
sectional, ethical or regional groups.
2. Uniformity – central government alone can establish uniform laws and other public
service that help people to move more easily from one part of the country to
another.
3. Equality – decentralization has the disadvantage that it forces peripheral
institutions to rely on the resources available in their locality or region. Only central
governments can rectify inequalities that arise from the fact that the areas with the
greatest social needs are invariably those with the least potential for raising
revenues.
4. Prosperity – economic development and centralization invariably go hand in hand.
Only central government, for instance, can manage a single currency, control tax,
and spending policies with a view to ensuring growth, and, if necessary, provide
an infrastructure in the form of roads, railways, and airports, among others.
Decentralization includes the following:
1. Participation – local government is certainly more effective than central

government in providing opportunities for citizens to participate in the political life
of their community. The benefit of widening the scope of political participation
include the fact that it helps to create a better educated and more informed
citizenry.
2. Responsiveness – peripheral institutions are usually ‘closer’ to the people and
more sensitive to their needs. This both strengthens democratic accountability and
ensures that government responds not merely to the overall interests of society
but also to the specific needs of particular communities.
3. Legitimacy – physical distance from government affects the acceptability or
rightness of its decisions. Decisions made at a local level are more likely to be
seen as intelligible and therefore legitimate. In contrast, central government my
appear remote, both geographically and politically.
4. Liberty – as power tends to corrupt, centralization protects liberty by dispersing
government power, thereby creating a network of check and balances.
Decentralized Governance
For development and governance to fully responsive and representational, people and
institutions must be empowered at every level of society to ensure that people participate
in, and benefit from their own governance institutions and development service.
Decentralization and Democratic Governance
Decentralization according to Raul P. De Guzman generally refers to the systematic and

rational dispersal of power, authority and responsibility from the center to the periphery,
from top to lower levels and from the national to local governments. There are two major
reasons why government decentralize:
a. Decentralization hastens decision-making process by decongesting central
government and reducing red tape.
b. It increases citizen participation and empowers them by leading to a more open
and democratic government.
Decentralization takes three major forms:
▪ Decentralization involves the transfer of functions to lower level administrative

units designated by the central office. It is essentially a management tool to
decongest the central office and spare it from having to act on matters including
routine and administrative matters that maybe address at the lower level.
However, final and “substantive” authority still rests in the central authorities.
▪ Devolution involves the transfer of powers and authorities to lower level political
or local government units. A local government essentially has the following
major features:
The notion of devolution has always been related to that of local autonomy.
▪ Debureaucratization is the third mode of decentralization in the Philippine

context that involves the transfer of powers and authorizes to units not within
the purview of the government.
Dimensions and Forms of Decentralization
Political Decentralization
‒ Involves the transfer of political authority to the local level through the establishment
or re-establishment of elected local government electoral reform, this is to give citizens
or their elected representatives more power in public decision-making; thus, realizing
democratization by giving the elected local officials more power in the formulation and
implementation of policies.
Administrative Decentralization
‒ Seeks to redistribute authority, responsibility and financial resources for providing
public services among different levels of government. It is the transfer of responsibility
for the planning, financing and management of certain public functions from the central
government an its agencies to field units of government agencies, subordinate units
or level of government, semi-autonomous public authorities or corporations, or area-
wide, regional or functional authorities.
o Deconcentration redistributes decision making authority and financial and

management responsibilities among different levels of the central government.
This concept involves central agencies assigning certain function to lower-level
branch offices.
o Delegation involves the transfer of authority from one public agency to another
agency or service provider for a defined role, tasks or functions thus
accountability of the source agency is also transferred to the recipient agency.
o Devolution is an extensive form of decentralization, is the creation or increased

reliance upon subnational levels of government, with some degree of political
economy, that are substantially outside direct central government control yet
subject to general policies and laws, such as those regarding civil rights and
rule of law. “when governments devolve functions, they transfer authority for
decision making, finance and management to quasi-autonomous units of local
government with corporate status.
Fiscal Decentralization
‒ Refers to the shifting of financial power to the local level. It involves increasing or
reducing conditions on the inter-governmental transfer of resources and giving
jurisdictions grater authority to generate their own resources.
Economic or Market Decentralization

‒ The most complete forms of decentralization from a government’s perspective are
privatization and deregulation because they shift responsibility for functions from the
public to the private sector. They allow functions that had been primarily or exclusively
the responsibility of the government to be carried out by businesses, community
groups, cooperatives, private voluntary associations and other non-government
organizations.
o Privatization can range in scope from leaving the provision of goods and services
entirely to the free operation of the market to “public-private partnership” in which
government and the private sector cooperate to provide services or infrastructure.
Privatization can include:
1) Allowing private enterprises to perform functions that had previously been

monopolized by the government;
2) Contracting out the provision or management of public services or facilities to
commercial enterprises indeed, there is a wide range of possible ways in which
function can be organized and many examples of within public sector and
public-private institutional forms, particularly in infrastructure;
3) Financing public sector program through the capital market and allowing private
organizations to participate; and
4) Transferring responsibility for providing services from the public to private
sector through the divestiture of state-owned enterprises.
o Deregulation reduces the legal constrain on private participation in service

provision or allows competition among private suppliers for services that in the past
had been provided by the government or by regulated monopolies. In recent years
privatization and deregulation have become more attractive alternatives to
governments in developing countries.
ACTIVITY:
Essay
1. Relate the principle of decentralization with the theory of Reinventing Government
2. Where should the balance between centralization and decentralization lie?
Next Topic:
A. Local Government Systems
‒ The Role of LGUs in Decentralized Development
‒ Models and Structure of LGUs
B. Philippine local government structure

‒ History
‒ Legal Basis
‒ Structure

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Lesson 1

Decentralization and Local Governance

Decentralization refers to the restructuring of authority so that there is a system of co-

Local Governance comprises a set of institutions, mechanisms and processes,

Centralization and Decentralization

Centralization includes the following:

Decentralization includes the following:

1. Participation – local government is certainly more effective than central

Decentralization and Democratic Governance

Decentralization according to Raul P. De Guzman generally refers to the systematic and

▪ Decentralization involves the transfer of functions to lower level administrative

▪ Debureaucratization is the third mode of decentralization in the Philippine

o Deconcentration redistributes decision making authority and financial and

o Devolution is an extensive form of decentralization, is the creation or increased

Economic or Market Decentralization

1) Allowing private enterprises to perform functions that had previously been

o Deregulation reduces the legal constrain on private participation in service

1. Relate the principle of decentralization with the theory of Reinventing Government

2. Where should the balance between centralization and decentralization lie?

B. Philippine local government structure

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