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Comparative Public Policies in Perspective: Decentralized Service Delivery

Kyoko KuwajimaJICA Senior FellowLee Kuan Yew School of Public PolicyNational University of Singapore

EXECUTIVE PUBLIC POLICY TRAINING PROGRAM FOR VIETNAMESE GOVERNMENT OFFICIALS

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Outline for today

1. Definition and Concept of Decentralization

2. Common but Diversified Decentralization –Cases of East Asian Countries

3. Long-term Process of Decentralization–Case of Japan

1. Definition and Concept of Decentralization

• Decentralization = the transfer of power from central government to lower levels of government, including responsibility for planning and management of various government functions, as well as resource-raising and resource allocation.

Administrative DecentralizationPolitical DecentralizationFiscal Decentralization

Types of Decentralization (1)

Administrative Decentralization• Deconcentration = the transfer of authority and

responsibility to central government officials such as governors or district officers, and officials located at local branches of central ministries

• Delegation = the transfer of authority and responsibility from central government to subnational governments or specified agencies

Types of Decentralization (2)

Political Decentralization• Devolution = the transfer of functions or

authority from central government to subnational governments that are governed by locally elected representatives.

Fiscal Decentralization• Financing mechanisms that underpin all

forms of decentralization = the transfer of funds, and sometimes revenue-raising powers from central government to subnational governments 5

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General Trend of Decentralization• Philippines 1991-• Indonesia 1999-• Vietnam (1996- ) 2004-• Thailand 1997-Fast Starters: Philippines and IndonesiaIncrementalists: China and VietnamCautious Mover: Thailand and Cambodia(World Bank (2005) East Asia Decentralizes)

2. Common but Diversified Experience - East Asian Countries

Diversities of Vertical Organization

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Country Levels of Subnational Governments

Average population of

first-tier subnational

governments (million 2002)

Indonesia

Philippines

ChinaVietnam

Cambodia

Thailand

3

4

43

2

(3)

Provinces (33), Special Regions (2) & Capital;Local Governments: Cities and Districts (440);VillagesProvinces (79); Cities (112); Municipalities (1496); Villages (41944)Provinces(20) and Municipalities (4);Provinces(58) and Municipalities(5); Districts (599); Communes (9,082)Provincial Administration; Elected Communes and Sangkat (1621)Provincial Administration; Elected Provincial(75), District (811) and Subdistrict

7.0

0.5

40.01.3

0.8

0.5

Source: World Bank (2005), CLAIR/COSLOG (2009)

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Country Policy OrientationIndonesia

Philippines

China

Vietnam

Cambodia

Thailand

Focus on substantial devolution to cities and districts; limited formal role at lowest levels; more emphasis on the role of higher levels since 2004Focus on devolution to subprovincial units, but provinces pay a significant roleMain focus on deconcentration to provinces and large cities, although lower levels have larger public expenditure role and elements of de facto devolution have emerged in some areas; provinces have considerable regulatory control over lower levelsMain focus on deconcentration with stronger role for provinces, including regulatory control over subprovincial governments that have been allocated rights over specific functions, approaching devolutionHybrid: with deconcentration to provinces and devolution to communes; commune system given greater emphasis but provinces significant in terms of public expenditureHybrid: historical focus on deconcentration to provinces and districts and shift towards devolution to local institutions at levels of municipalities, districts and subdistricts since 1997

Diversities of Decentralization Policy

Source: World Bank (2005)

Diversities of Capacity (Access to Finance)

Country

Local Collection Inter-governmental TransferInformal revenues

Own-source revenues

Shared taxes

Unconditional transfers

Conditional transfers

IndonesiaPhilippinesChinaVietnamCambodiaThailand

○◎◎○○○

◎◎●◎○◎

●●○◎●◎

○○●●

n.a.◎

◎◎●◎●○

9Source: World Bank (2005) and other sources

Note: ○：Low, ◎：moderate and ●：high refer to the rough proportion of total subnational revenues attributable to each revenue

Issues behind decentralization (1)

• Prodemocracy movement after the collapse of government more favored subprovincial levelsIndonesia: rivalry between central political elites and

provincial elites led to focus on districtsPhilippines: call for grassroots “people’s power” led

to devolution to multiple levels• Economic reform administrative/fiscal focusChina: need to manage large and diverse areas; no

formal policy and variation of treatmentVietnam: balanced growth thr. public adm. reform

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Issues behind decentralization (2)

• Change in political support stop-and-start progress

Thailand: 1997 Constitution and comprehensive plan; favored more role of centrally appointed governors under Thaksin administration

Indonesia: concern over loose-end led to the return of more role of provinces by Law 32

• Inconsistencies and unclear division of functions and authority

Philippines, China & Vietnam : conflate the accountability of local staff

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Issues behind decentralization (3)

• Limited authority over resource-raising and allocation and strong central civil service control

Philippines: limited grant remain for non-wage cost China, Indonesia: tendency of charging illegal

extrabudgetary fees: tendency of non-transparent staff payment lack of incentives for lean management• Limited capacity of local bodiesGeneral tendency: Insufficient coordination between

planning and budgeting; poor collectionThailand, Cambodia: cautious progress

Triangle Strategy for Decentralization

Mission- National Goal- Problems to be tackled

Institutional Design- Rules- Accountability Relations- Political Support

Capacity of Government- Financial Resources- Operational Capacity- Attitude

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3.Long-Term Process of Decentralization – Case of Japan

• Modern Nation Building (1868-): Deconcentration and Delegation for achieving National Minimum

• Post War Period (1945-): Delegation for social and economic development

• Decentralization Reforms (late1990s-)Devolution for dealing with more diversified social needs

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Modern Nation Building (1868-)

Priorities of Meiji Government: • Building of Prosperous and Strong StateAiming at National Integration & Industrialization Achieving “National Minimum” through Standardized

Provision of Service Delivery• Centralization and Deconcentration with

Elaborate Local NetworkLocal Gov’t System created as effective vehicle Tasks

delegated and controlled by M. of Interior

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Source: Kengo AKIZUKI (2005)

Acting as General Branch Offices of MOI

(47) Delegation from Prefectures

Post-war Period (1945-)

Thrusts of New Constitution : • Principle of Autonomy Complete autonomy in prefectures Dismantling of Ministry of Interior Establishment of Local Autonomy Law (1947-)• Succeeding Delegation from central

government to prefecturesConcern over local management capacityRetaining control and supervision by upper level of

governments• Resulted Remarkable Economic Growth

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Source: Kengo AKIZUKI (2005)

Industrial Development

Export Promotion

Advanced Social

Services

Improving Living Standard

(Urban Development)

Contributions to National Development Plans by centralized inter-government system

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Post-war Local Government System to ensure integrated national development

Central Ministries

Decision making authority is reserved by central government : implementation is controlled and intervened by national policy

DelegationSubsidiesPersonnel Exchange Program

Role of Implementers

Role of Planners

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Source: Kengo AKIZUKI (2005)

Overlapped functions (Infrastructure, education and health)Overlapped tax bases (personal income/inhabitant/corporate income)Fiscal equalization through local allocation tax and subsidies)

Decentralization Reforms since the late1990s

• Comprehensive Decentralization Law (2000)Local Autonomy (abolish delegation)

• Local Administration Reform (adoption of NPM, cooperation among local governments) 21

Changing Environment since the 1990s•Economic globalization and increasing external threats•Increase of ageing population•Persistent government debtTo deal w ith more diversified social needs more stringently based on more local autonomy

Triangle Strategy for Decentralization: case of Japan

MissionNational Integration National Economic GrowthMeeting diversified social needs

Institutional DesignDeconcentrationDelegation and Capacity development for local governmentsMore local autonomy

Capacity Fiscal equalization by subsidies and grantsBuilding Capacitythrough exchange Fiscal moral hazard