The Economic Efficiency Case for Decentralized Government

Abstract

The relationships between size of local governments, the efficient provision of their services and the degree of citizen participation in local public life have been the focus of debate in many developed countries since the early 1950s. The European Charter of Local Self-Government clearly incorporates the principle that local governments should be as small as possible. Formulated by the Council of Europe in 1985, the Charter has since been ratified by almost all member states of the Council of Europe. Within the European Union, the decentralization principle has been adopted under the name of ‘subsidiarity’, that government powers should be exercised at the lowest level of government possible.

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.

(European Charter of Local Self-Government: Article 4)