Decentralisation or deconcentration: The case of regional and local economic development in South Africa

Abstract

The widespread globalisation, democratisation and decentralisation process that took place in developing nations in the early 1990s created unique opportunities for subnational governments to play an important role in delivering developmental outcomes. Revitalising regional and local economies is one important mandate that emerged with the decentralisation process as a key function for local governments. However, the local government sphere in South Africa faces failures in driving regional and local economic development due to various institutional and market-related challenges. Against the failure of decentralised entities to drive regional and local economic development in South Africa, this article considers the utilisation of deconcentration through dedicating national administrative powers and resources to the regional level to revitalise the prospects of local economies. The article argues that there are better prospects for regional and local economic development through deconcentration due to the expertise, resources and capacities found within the national and provincial governments, as they receive a significant share of the national division of revenues. The article further demonstrates how deconcentration can be implemented through the state deconcentrating and managing its economic development functions at the regional level to municipal-owned district economic development entities tasked with stimulating regional economic development.

Unfunded Mandates and the Economic Impact of Decentralisation. When Finance Does Not Follow Function

“…This is in line with our main hypothesis since our regressions indicate that wider unfunded mandates entail lower rates of regional economic growth. 9 Misalignments between fiscal and political decentralisation may thus hamper economic efficiency and growth (Khambule, 2021; Prud’homme, 1995). If the magnitudes of the coefficients for fiscal and political decentralisation are broadly similar but with opposite signs, it could be argued that the presence of smaller or larger unfunded mandates is key in determining whether decentralisation has an overall positive or negative effect, holding everything else constant.…”

Governing concept or political buzzword? Contested perceptions of local control

“…Rondinelli and Nellis (1986) identified four specific approaches to decentralization. Deconcentration, which refers to the transfer of power and resources to local and regional actors under the control of a central government (see: Khambule, 2021); delegation, which transfers powers to local actors with a degree of autonomy from the central government; devolution, whish transfers powers to autonomous governments with incorporated status; and privatization, which transfers powers from the central government to private entities.…”