Decentralization is the process of redistributing or transferring functions, powers, responsibilities, and resources from central authorities to lower levels of government, most often to local self-government bodies.
The main goal of decentralization is to bring the decision-making process closer to the people who will be directly affected by those decisions and to give them more opportunities to influence their own lives and the development of their communities.
Forms of decentralization
Decentralization is often associated with the transfer of power, but it takes various forms:
1. Political decentralization (devolution)
This is the deepest form of decentralization, which involves the transfer of significant political powers and responsibilities for decision-making to elected local authorities. These bodies have a certain degree of autonomy in shaping their policies and budgets. The Ukrainian decentralization reform, in particular, the creation of amalgamated territorial communities (ATCs), is a vivid example of political decentralization.
This form involves the transfer of administrative tasks and powers from central ministries and agencies to their territorial subdivisions or local representations. However, final control remains with the central authority. For example, regional departments of a certain ministry.
3. Fiscal decentralization
This is the transfer of financial powers, such as tax collection, budget management, and the formation of local budgets, from the central government to local authorities. It is a key element of true autonomy.
4. Economic decentralization
Focused on transferring powers in the area of economic development and resource management to the local level, allowing communities to independently determine their business development, investment priorities, and the use of local resources.
5. Decentralization of service delivery (privatization or outsourcing)
This is the transfer of functions for providing public services to non-governmental organizations, private companies, or public organizations. Although this is not a transfer of power per se, it still reduces centralized control over service delivery.
Principles of decentralization
Subsidiarity is the principle according to which decisions should be made at the lowest possible level of government capable of effectively implementing them. This means that the central authority intervenes only when the local level cannot cope with the problem.
Local authorities must be financially independent, that is, have sufficient own financial resources to perform the functions assigned to them. This is achieved through the transfer of taxes, the formation of local budgets, and the ability to attract additional funds.
Decentralization requires accountability of local authorities to their voters. Namely, transparency in decision-making and spending to ensure public oversight of local government actions.
Involvement of the publicin public discussions, local referendums, activities of self-organization bodies, etc.
A disadvantage of decentralization is the inequality in the development of communities, where some, more resourceful ones, thrive, while others lag behind due to a lack of resources, leading to regional disparities.
Decentralization in Ukraine
The Ukrainian decentralization reform, initiated in 2014, is one of the largest examples in Europe. It involved the voluntary amalgamation of communities into stronger and more capable territorial units, the transfer of significant financial resources (in particular, a portion of personal income tax remains in local budgets), as well as the transfer of a wide range of powers in the areas of education, healthcare, social protection, architecture, urban planning, and land relations.
