Although Figures 2.1 and 2.2 are highly stylized, and each individual country determines its own objectives, path, and destination when it comes to decentralization and localization reforms, this typology provides useful guidance with respect to the gradual improvement of subnational and intergovernmental institutions and (fiscal) management, as in reality, only a few countries (if any) transition from a complete centralized system to a fully inclusive, responsive devolved public sector system in a single step.
Instead, over the course of decades (or longer), countries may adjust their intergovernmental systems to prevailing political, economic and social conditions, often in an iterative manner. Bahl and Martinez-Vazquez (2006) describe a normative approach to sequencing decentralization, containing a sequence of six steps, including: Step 1 – carry out a national debate on the issues related to decentralization policy; Step 2 – do the policy design and develop a White Paper; Step 3 – pass the Decentralization Law; Step 4 – develop the implementing regulations; Step 5 – implement the decentralization program; and Step 6 – monitor, evaluate, and retrofit.
In reality, decentralization reforms are seldom sequenced in a linear fashion, with forward progress often achieved when windows of opportunity for reform arise. There may be significant variances between the decentralization policies and legislation passed and their interpretation and implementation on the ground. Therefore, sometimes countries take two steps forward and one step back, while at other times taking one step forward and two steps back. Furthermore, while the long arc of multilevel governance bends towards devolution as development progresses, the arc is long and, at any given point in time, does not necessarily always point towards greater devolution. Instead, in the short term, the direction and nature of intergovernmental reforms is often dictated not by what might be technically optimal, but by what is feasible given the political realities of the time.