Decentralization Law and Legal Definition

Decentralization is used in different contexts, but broadly refers to reforming the fiscal, political, and administrative framework in which entities operate. There are four types of decentralization: fiscal, political, administrative and market decentralization.

Fiscal decentralization is the decentralization of funding resources and revenue generating powers. Political decentralization occurs when political power and authority are decentralized to sub-national levels. Administrative decentralization aims at transferring decision making authority, resources and responsibilities for the delivery of a select number of public services from the central government to other lower levels of government, agencies, field offices of central government line agencies. Market decentralization is allowing economic and business functions that had been primarily or exclusively the responsibility of government to be carried out by businesses, community groups, cooperatives, private voluntary associations, and other non-government organizations.