Incorporating Administration and Governance in Designing and Implementing Fiscal Decentralization: Missed Opportunities and Future Possibilities

Public sector decentralization has been a global phenomenon for many years. The fiscal framework is a foundational element of decentralizationÑwithout adequate, well-designed and well-utilized resources, decentralization cannot meet its intended objectives. Although fiscal decentralization is necessary to pursue priority goals, it is not sufficient for good performance. The broader intergovernmental framework needs not only to establish the fiscal powers and functions of different levels of government, but also to incorporate or be linked to other policies on public sector structures and processes that support subnational government operations. Failure to capture relationships among administrative, fiscal and political dimensions of decentralization can limit their impact. This chapter focuses on selected aspects of decentralized administration, governance and operations that must work together with fiscal elements for successful and sustainable decentralization. It also advocates for greater balance between the design of decentralization and its strategic implementation, which has received less attention.