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Powered and implemented by Interactive Data Managed Solutions. Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision-making, are distributed or delegated away from a central, authoritative location or group. The word “centralization” came into use in France in 1794 as the post-French Revolution French Directory leadership created a new government structure. The word “decentralization” came into usage in the 1820s.
Ideas of liberty and decentralization were carried to their logical conclusions during the 19th and 20th centuries by anti-state political activists calling themselves “anarchists”, “libertarians,” and even decentralists. In early twentieth century America a response to the centralization of economic wealth and political power was a decentralist movement. It blamed large-scale industrial production for destroying middle class shop keepers and small manufacturers and promoted increased property ownership and a return to small scale living. Decentralization was one of ten Megatrends identified in this best seller. Stephen Cummings wrote that decentralization became a “revolutionary megatrend” in the 1980s. In 1983 Diana Conyers asked if decentralization was the “latest fashion” in development administration. In 1983, “Decentralization” was identified as one of the “Ten Key Values” of the Green Movement in the United States.
Graphical comparison of centralized and decentralized system. Those studying the goals and processes of implementing decentralization often use a systems theory approach. However, has been seen as part of a systems approach. Norman Johnson of Los Alamos National Laboratory wrote in a 1999 paper: “A decentralized system is where some decisions by the agents are made without centralized control or processing.
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An important property of agent systems is the degree of connectivity or connectedness between the agents, a measure global flow of information or influence. University of California, Irvine’s Institute for Software Research’s “PACE” project is creating an “architectural style for trust management in decentralized applications. In such a decentralized system, there is no single centralized authority that makes decisions on behalf of all the parties. Instead each party, also called a peer, makes local autonomous decisions towards its individual goals which may possibly conflict with those of other peers. Peers directly interact with each other and share information or provide service to other peers.
An open decentralized system is one in which the entry of peers is not regulated. Decentralization in any area is a response to the problems of centralized systems. In decentralization the principle of subsidiarity is often invoked. It holds that the lowest or least centralized authority which is capable of addressing an issue effectively should do so.
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Decentralization is often linked to concepts of participation in decision-making, democracy, equality and liberty from higher authority. Decentralization has been described as a “counterpoint to globalization” which removes decisions from the local and national stage to the global sphere of multi-national or non-national interests. Decentralization brings decision-making back to the sub-national levels. Decentralization strategies must account for the interrelations of global, regional, national, sub-national, and local levels. Johnson writes that diversity plays an important role in decentralized systems like ecosystems, social groups, large organizations, political systems.
Advocates of political decentralization hold that greater participation by better informed diverse interests in society will lead to more relevant decisions than those made only by authorities on the national level. Decentralization has been described as a response to demands for diversity. In business, decentralization leads to a management by results philosophy which focuses on definite objectives to be achieved by unit results. The same principles can be applied to government. Decentralization promises to enhance efficiency through both inter-governmental competition with market features and fiscal discipline which assigns tax and expenditure authority to the lowest level of government possible. It works best where members of subnational government have strong traditions of democracy, accountability and professionalism. According to the United Nations Development Programme, it is “more than a process, it is a way of life and a state of mind.
Initiation The processes by which entities move from a more to a less centralized state vary. Project and program planners must assess the lowest organizational level at which functions can be carried out efficiently and effectively. Governments deciding to privatize functions must decide which are best privatized. Existing types of decentralization must be studied.
The appropriate balance of centralization and decentralization should be studied. While in earlier years small towns were considered appropriate, by the 1960s, 60,000 inhabitants was considered the size necessary to support a diversified job market and an adequate shopping center and array of services and entertainment. Even in bioregionalism, which seeks to reorder many functions and even the boundaries of governments according to physical and environmental features, including watershed boundaries and soil and terrain characteristics, appropriate size must be considered. Inadvertent or silent Decentralization ideally happens as a careful, rational, and orderly process, but it often takes place during times of economic and political crisis, the fall of a regime and the resultant power struggles. Even when it happens slowly, there is a need for experimentation, testing, adjusting, and replicating successful experiments in other contexts. Decentralization usually is conscious process based on explicit policies. However, it may occur as “silent decentralization” in the absence of reforms as changes in networks, policy emphasize and resource availability lead inevitably to a more decentralized system.
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A variation on this is “inadvertent decentralization”, when other policy innovations produce an unintended decentralization of power and resources. Asymmetry Decentralization may be uneven and “asymmetric” given any one country’s population, political, ethnic and other forms of diversity. In many countries, political, economic and administrative responsibilities may be decentralized to the larger urban areas, while rural areas are administered by the central government. Decentralization of responsibilities to provinces may be limited only to those provinces or states which want or are capable of handling responsibility. Measurement Measuring the amount of decentralization, especially politically, is difficult because different studies of it use different definitions and measurements.
Historians have described the history of governments and empires in terms of centralization and decentralization. Rising government expenditures, poor economic performance and the rise of free market-influenced ideas have convinced governments to decentralize their operations, to induce competition within their services, to contract out to private firms operating in the market, and to privatize some functions and services entirely. East Province, Rwanda, created in 2006 as part of a government decentralization process. Government decentralization has both political and administrative aspects. Its decentralization may be territorial, moving power from a central city to other localities, and it may be functional, moving decision-making from the top administrator of any branch of government to lower level officials, or divesting of the function entirely through privatization. Political decentralization signifies a reduction in the authority of national governments over policymaking by endowing its citizens or their elected representatives with more power.
A national government may decide to decentralize its authority and responsibilities for a variety of reasons. Decentralization reforms may occur for administrative reasons, when government officials decide that certain responsibilities and decisions would be handled best at the regional or local level. The rise of regional ethnic parties in the national politics of parliamentary democracies is also heavily associated with the implementation of decentralization reforms. In addition to increasing the administrative efficacy of government and endowing citizens with more power, there are many projected advantages to political decentralization. The European Union follows the principle of subsidiarity, which holds that decision-making should be made by the most local competent authority.
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The EU should decide only on enumerated issues that a local or member state authority cannot address themselves. Furthermore, enforcement is exclusively the domain of member states. Political decentralization does not come without its drawbacks. A study by Fan concludes that there is an increase in corruption and rent-seeking when there are more vertical tiers in the government, as well as when there are higher levels of subnational government employment. Four major forms of administrative decentralization have been described. Deconcentration, the weakest form of decentralization, shifts responsibility for decision-making, finance and implementation of certain public functions from officials of central governments to those in existing districts or, if necessary, new ones under direct control of the central government. Delegation passes down responsibility for decision-making, finance and implementation of certain public functions to semi-autonomous organizations not wholly controlled by the central government, but ultimately accountable to it.
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It involves the creation of public-private enterprises or corporations, or of “authorities”, special projects or service districts. Devolution transfers responsibility for decision-making, finance and implementation of certain public functions to the sub-national level, such as a regional, local, or state government. Divestment, also called privatization, may mean merely contracting out services to private companies. Or it may mean relinquishing totally all responsibility for decision-making, finance and implementation of certain public functions. Facilities will be sold off, workers transferred or fired and private companies or non-for-profit organizations allowed to provide the services.
While this process usually is called fiscal federalism it may be relevant to unitary, federal and confederal governments. Fiscal decentralization can be achieved through user fees, user participation through monetary or labor contributions, expansion of local property or sales taxes, intergovernmental transfers of central government tax monies to local governments through transfer payments or grants, and authorization of municipal borrowing with national government loan guarantees. Economic decentralization can be done through privatization of public owned functions and businesses, as described briefly above. But it also is done through deregulation, the abolition of restrictions on businesses competing with government services, for example, postal services, schools, garbage collection. Since the 1970s there has been deregulation of some industries, like banking, trucking, airlines and telecommunications which resulted generally in more competition and lower prices. One example of economic decentralization, which is based on a libertarian socialist model, is decentralized economic planning.
Decentralized planning is a type of economic system in which decision-making is distributed amongst various economic agents or localized within production agents. Central governments themselves may own large tracts of land and control the forest, water, mineral, wildlife and other resources they contain. It also may control most private land through land-use, zoning, environmental and other regulations. Libertarian socialism is a group of political philosophies that promote a non-hierarchical, non-bureaucratic society without private property in the means of production.
For Proudhon, mutualism involved creating “industrial democracy,” a system where workplaces would be “handed over to democratically organised workers’ associations . Free market ideas popular in the 19th century, such as those of Adam Smith returned to prominence in the 1970s and 1980s. There would be no difficulty about efficient control or planning were conditions so simple that a single person or board could effectively survey all the relevant facts. It is only as the factors which have to be taken into account become so numerous that it is impossible to gain a synoptic view of them that decentralization becomes imperative. Owen, this does not mean that all firms themselves have to be equally decentralized. He writes: “markets allocate resources through arms-length transactions among decentralized actors.