Central governments, local governments and other territorial bodies ought to be considered as mutually dependent.

The local public sector can be defined as that part of the public sector “at the local level” that regularly interacts with residents, civil society, and the private sector in a localized setting; it is where residents and businesses regularly receive services from the public sector and where residents interact with government officials. The local public sector thus encompasses the activities of devolved local governments, deconcentrated local administrations, delegated services provides by NGOs and parastatal organizations, as well as localized services provided by central agencies.

As such, the local public sector is the local space within which localized service delivery takes place. In most countries, the responsibility for the delivery of local public services—even within a single sector or for a single service—is often assigned concurrently to different government levels, where each level contributes one or more elements to the provision of frontline services. As a result local public services are often provided and funded through a combination of different ‘vertical’ or intergovernmental mechanisms at the same time.

With this in mind, decentralization and local governance are increasing understood as a multi-level system of governance and service delivery, where the ability of local governments or other local public sector entities to contribute to the more effective delivery of public services is defined to a considerable extent by the intergovernmental institutional context within which they operate (Charbit, 2011). Rather than treating them as isolated actors, subnational authorities and central governments ought to be considered as mutually dependent.

The key underlying question is not whether to ‘decentralize or not’, which falsely suggests that public services can be delivered effectively without having the public sector reach down to the local level. Nor is the key policy question which specific decentralization model to follow, since most countries in fact rely on different funding streams and vertical governance mechanisms at the same time. Instead, the key challenge is to look at ways to assign functional responsibilities and improve capacity and coordination among public stakeholders at different levels of government, and to determine ways in which local governments and other local-level stakeholders are able to increase the efficiency, equity and sustainability of public services and public spending, and/or serve as catalysts for a territorial approach to local development.


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