Confronting the Challenges to Democracy in the 21st Century
Second World Assembly
November 12-15, 2000
São Paulo, Brazil
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Improving Governance through Federalism: Decentralization, Devolution, and other Approaches
Organizers:
Foundation for Administrative Development (Brazil)
Forum of Federations (Canada)
Rapporteur:
Isawa Elaigwu (Nigeria)
Institute of Governance and Social Research
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Moderator:
Pedro Luiz Silva (Brazil)
Foundation for Administrative Development (Brazil)
Presenter:
Christina Murray (South Africa)
University of Cape Town
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Through its pyramidical structure, federalism provides for decentralization, especially devolution of powers, to sub-national units. Decentralization in a federal context can be constitutional and/or administrative concerning techniques of governance, which does not include groups. A federal system provides more of an opportunity than does a unitary system for more participation at sub-national levels, both state (provincial) and local. A federal government like Germany's, for example, provides for an integrated form of decentralization, while one like Canada's provides for a more compartmentalized form. In these contexts, sub-national autonomy becomes very important as it provides for more participation by the people and opportunities for controlling their own destiny.
While there may be variants of decentralization and federations, therefore, the quality of governance can be improved greatly through the opportunities that decentralization and federalism provide for participation and autonomy. However, there are problems in adopting federal models. It must be borne in mind that a federal government presupposes greater complexity, a heightened need for coordination, and higher expense.
Challenges:
- Federalism is financially expensive, with structures at each tier of government that must be financed.
- Federalism is institutionally complex and may demand greater administrative bureaucratic capacity at each level than is available at any point in time. Capacity at each level has serious implications for the formulation and execution of social policies and, ultimately, good governance.
- Federalism demands a relatively high level of cooperation and active intergovernmental relations.
Recommendations:
- Federalism, with all its complexity, should provide autonomy for each level of government in a democratic context to enable local people to set priorities and use resources to achieve them.
- Federal systems must extract greater resources for effective financing of the structures of governance at each level of autonomy.
- Greater capacity at each institutional level of government must be developed to enhance efficiency in the delivery of services to the people; this enhances good governance.
- To make a federal government more responsive to the people, a network of intergovernmental relations should be established. These can be formal and/or informal, constitutional and/or statutory, and/or ad hoc. A network of intergovernmental institutions helps in coordinating the activities and policies of the various levels of government and facilitates greater cooperation among the tiers.
- The pattern of fiscal federalism should take into consideration the functions of each level of government and its corresponding tax powers. The demands of fiscal equalization, to give all units of the federation a sense of participation, cannot be over emphasized.
- In the context of a changing global situation and demands for greater autonomy of federative units, there should be a shift from federal control functions to federal interventionist functions. A federal government should seek to intervene to correct inadequacies at the sub-national levels, rather than seek to control them.
- Democratic institutional arrangements and processes are important to strengthening federations and enhancing good governance.
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