On demands for greater decentralization

By Elwin Tobing

BOSTON (JP): The current widespread demand for greater decentralization emerged primarily from the dismal performance of the highly centralized development policy under the New Order regime. The regime not only failed to improve the social and economic conditions of the nation but also alienated the people and local and regional authorities from the decision-making process of vital policies.

Defined broadly as a transfer of authority from a higher to lower level of government for the management of public functions, decentralization is considered an effective strategy to resolve our national problems in improving planning and implementing national development programs at the local level. This argument is based at least on two reasons.

The first and more important is that decentralization will enhance the people's participation in the development process. Through the people's participation, the practice of democratic principles at the grassroots level can be fostered and national unity can be promoted.

Greater participation of the people and local governments will also reduce potential sources of conflict. Certainly, the people who are directly affected by a decision will not always make the right choice. If they make a mistake, they will suffer the consequences and this will give them the awareness to make wiser choices in the future. However, if someone else made that decision for them, they would have every reason to direct their anger at the responsible institution. The separatist movements in Aceh and Irian Jaya can be viewed as expressions of anger at the central government in Jakarta.

The other reason is based on the principle of optimal-level decisions. Jan Tinbergen (1981), a Noble prize winner in economics for having developed and applied dynamic models for the analysis of economic policies, identified two properties of an optimal level decision. First, it is the lowest possible level that a maximum of participation and information is used. Second, it is high enough to entail negligible effects on the welfare of individuals living outside the area for which the central planners are responsible.

This is very important since central planners often do not care about the consequences of the decisions they make on local and regional development policies. A classic illustration is the World War I Gallipoli campaign of 1915 to 1916. As portrayed in the film Gallipoli, a general in a bunker deep behind the front lines used his telephone to order wave after wave of young men to storm a heavily defended trench, ignoring the local commander's advice that the effort is futile. As a result of the general's order, all the men died.

Experience shows, however, that many decentralization programs, especially in developing countries, do not live up to initial expectations. In several African, Asian and Latin American countries, decentralization programs paradoxically boosted centralization.

By examining the effects of local government reforms in six countries, including Malaysia, Thailand and Indonesia, Nooi (1987) concluded that decentralization programs not only failed to enhance local autonomy, they enhanced the centralization of power. Experience from countries such as Tanzania and Kenya also suggests that the people's participation as a means of decentralization did not materialize; instead the control over development policies remained highly centralized.

The story from Latin American countries reveals the same results. Mawhood (1993) noted that economic failings in the region were a result of centralized development policies neatly veiled beneath the avowed decentralization policy statements of governments.

The failure of decentralization in many countries to enhance the people's participation has eroded the euphoria about its virtue as an effective strategy to improve national development programs. There were suggestions of returning to centralization, especially with the economic success stories of the "Asian Tigers". The Tigers -- Hong Kong, Singapore, South Korea and Taiwan -- have proven that economic power and a higher standard of living can be attained not through the decentralization of power but also the concentration of power in the hands of the central government.

Yet, the demand for decentralization is never diminished. The criticism expressed at the failure of decentralization was primarily a result of the lack of increased participation by the people. Another explanation is that power was decentralized to the wrong people, either central government appointees or the local elite. It is also believed proposed reforms have not been implemented as intended and there has not been a significant decentralization of power and authority.

The lessons for us are clear. Decentralization should not be seen as a general solution or a quick fix for all of our current national problems. Significant improvements in development and the participation of the people cannot be achieved merely by decentralizing our development programs. It is a necessary step but not sufficient by itself.

It is also imperative to underline that the implementation of decentralization requires strong political and administrative commitments from national leaders. The experience of the New Order regime revealed that national leaders misused decentralization programs for their own economic and political interests. The programs were designed in such a way that boosted the authority of the central government.

In addition, decentralization requires a fundamental change in the cultural behavior of local and central government officials. Our local and regional authorities are used to functioning as agents of the central government in communicating its instructions. The virtue of decentralization is not only the transfer of power from higher to lower-level authorities, but also from the government to the people. Unless people are the center of any decentralization program, there will always be a swing back to centralization.

Last but not least, decentralization has to be supported by adequate financial resources, skilled personnel and physical infrastructure at the local level. Also, decentralization programs have to be followed by rural financial reform. Almost 70 percent of our population still lives in rural areas. Without giving them access to financial resources, any new decentralization programs will only join the list of past failures.

The writer is studying for his doctorate in economics at Boston College in the United States.