Decentralisation is among the most important reforms of the past 50 years. Implemented to varying degrees in a majority of developed and developing countries around the world, decentralisation has profound implications due to its complex and systemic nature. Engaging in a decentralisation process affects all spheres of society, from the nature and the quality of governance, to a national wealth and economic growth and, more broadly, to citizen well-being.

Decentralisation is among the most important reforms of the past 50 years. This report argues that the question should not be whether decentralisation is good or bad in itself, but that decentralisation outcomes – in terms of democracy, efficiency, accountability, regional and local development – depend greatly on the way decentralisation is designed and implemented.

This chapter provides a summary of the key findings from the report. It highlights that decentralisation is among the most important reforms of the past 50 years, and has profound implications due to its complex and systemic nature. The question is not whether decentralisation is good or bad in itself, but that decentralisation outcomes – in terms of democracy, efficiency, accountability, regional and local development – depend greatly on the way decentralisation is designed and implemented. The report identifies ten guidelines for decentralisation to work and be conducive to regional development.

This chapter provides a definition of decentralisation, which covers three interdependent dimensions: political, administrative and fiscal. There can (or should) be no fiscal decentralisation without political and administrative decentralisation. The chapter clarifies the scope of the decentralisation concept, which is often confused with deconcentration for example. Finally, the chapter provides a comprehensive picture of the diversity in territorial organisation and decentralisation systems in OECD countries and beyond.

This chapter highlights that there has been a path towards decentralisation in a majority of OECD countries over the past decades. The chapter also underlines that deecentralisation trends around the world have often gone hand in hand with an upscale in subnational governance through amalgamations, inter-municipal cooperation, metropolitan governance, and the strengthening of regions. Municipal fragmentation has driven policies encouraging or imposing mergers or cooperation. In parallel, there has also been an increase in asymmetric decentralisation, i.e. the fact that governments at the same subnational government level have different political, administrative or fiscal powers. While asymmetric decentralisation appears more “natural” in federal countries, it is increasing in unitary countries. Finally, the chapter shows that decentralisation is too often understood as a simple increase in the power of local governments. The reality is much more complex, as most responsibilities are shared across levels of government. Decentralisation is about reconfiguring relationships between the central government and subnational governments towards a greater cooperation and a strategic role for national/federal governments.

Decentralisation is often subject to heated debate. The proponents of decentralisation tend to emphasize the pros and the critics often highlight the cons. Fortunately, after several decades of practical policy implementation, a considerable amount of information has accumulated on the effects of decentralisation. This chapter discusses the benefits and challenges of decentralisation using the best available information on research results and practical policies pursued in various OECD countries. After brief introduction, the chapter begins by describing the benefits and opportunities and then continues to examine the risks and challenges of decentralisation. Both sides of decentralisation are discussed from economic, administrative and political aspects. In the end of the chapter, a conclusion and a short summary table of the main effects are presented.

This chapter is the “handbook” component of this report. This chapter presents ten guidelines on selected key issues of decentralisation to aid the policy-makers to implement decentralisation reforms, as decentralisation outcomes depend very much on the way the process is designed and implemented. Each subsection follows the same structure: in the beginning, the issue in question is described and the key international trends and the rationale of the theme are discussed. The sections then present examples of good practices and pitfalls to avoid. The examples presented cover both unitary and federal countries. Finally, the key recommendations for policymakers are presented. A checklist to help identify the main aspects of the issue linked to the guideline in question is also provided in the end of every section.