The 'Dangers of Decentralization' and Their Relevance to Local Public Services

Abstract

This dissertation empirically evaluates the relevance of the three prominent dangers of fiscal decentralization, namely inefficiencies, regional inequalities and deficient accountability for the provision of local public goods related to health, education and public security. The major argument holds that the promise of fiscal decentralization theory does not always materialize. In fact, decentralization reforms should assess the risks related to increased inefficiencies, regional inequalities and deficient accountability in the context of public service provision. Also, the dissertation adds further insights to a debate which is characterized by a strong focus on the relationship between decentralization and economic growth, by a misconception of the notion of a efficiency and by a lacking understanding of the micro-level mechanisms that underlie macro-level effects.