This article generalizes arguments and counter-arguments within the scientific discussion regarding the determination of the optimal decentralization level, which will provide the country's innovative development, since the key task of decentralization has to be not only to expand the income and expenditure powers of the subnational formations but also to understand the final goal of this process-qualitative transformation of the country's economic system towards improving its innovativeness and competitiveness. Thus, the decentralization reform has to be the driver of the innovative economic development, which is the expected result of the managerial decision-making freedom increase at the local level, the subnational formations' financial self-sufficiency increase and more effective spending policy (expansion of the innovative projects financing amounts that will promote the sustainable economic growth). Systematization of the scientific works on the above problems proves that there is no one idea regarding the decentralization impact on the country's economic and innovative development among scientists. That is why it is urgent to continue the empirical searching in this area, that will enable to take into account the dual nature of consequences regarding the activation of the decentralization processes. The empirical study is carried out through using of the non-linear analysis form of dependence (GLM regression, which enables to identify the linear and nonlinear character of the relationship between variables) based on the panel data, formed for set of 23 states-OECD members