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Striking a Balance: Centralised and Decentralised Decisions in Government - WP 02/15

Publication Details

  • Striking a Balance: Centralised and Decentralised Decisions in Government
  • Published: Sep 2002
  • Status: Current
  • Author: Brady, Natalie
  • JEL Classification: D73; H19
  • Hard copy: Available in HTML and PDF formats only.

Striking a Balance: Centralised and Decentralised Decisions in Government

New Zealand Treasury Working Paper 02/15

Published September 2002

Author: Natalie Brady


This paper identifies factors to be looked at when considering the extent to which decisions within government should be centralised or decentralised. In practice, the solution is almost always likely to involve a balance between centralised and decentralised decision-making. Nevertheless there are a number of common factors that are generally applicable to questions of centralisation and decentralisation. This paper identifies those factors in order to provide some guidance for decisions regarding the location of decision rights. Rather than being prescriptive, the paper simply presents the relevant issues for consideration. Centralisation (or decentralisation) is a complex and multi-dimensional issue. It is partly for this reason that the paper does not suggest any specific solutions. The solution in any particular case will involve tradeoffs between the factors identified in the paper as well as value judgements regarding the ranking of the various factors.

In determining the appropriate balance between centralised and decentralised decisions, various factors are in tension. Centralisation can help ensure uniform and consistent standards, minimise inequalities, avoid the duplication of services, allow for the achievement of economies of scale, and increase coherence and coordination. Decentralisation, on the other hand, can help enhance local autonomy and empowerment, encourage customisation and innovation, and increase participation.

Economic, social, managerial and constitutional perspectives offer a number of theoretical frameworks that are useful in considering issues of centralisation/decentralisation. This paper draws together ideas from across these perspectives. It concludes that the solution is likely to be characterised by a “tight/loose” pattern whereby there is “tight” or centralised control over the major objectives that is then joined by “loose” or decentralised discretion over the ways in which those objectives are achieved to varying degrees.


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Table of Contents

List of Tables

1 Introduction

2 What is decentralisation?

3 Factors influencing (de)centralisation

4 The allocation of decision rights

5 Conclusion


Appendix - The perspectives

twp02-15.pdf (445 KB) pp. 1–18

List of Tables


This paper was originally drafted for the Chief Executives Reference Group on Central Agencies. It has benefited from comments received by this group as well as comments received at a seminar held by the New Zealand State Services Commission on 25 June 2002. In addition, helpful comments have been received on earlier drafts of this paper from Richard Norman, David Galt, Simon Macpherson, Andrew Kibblewhite, Jonathan Ayto and Veronica Jacobsen.


The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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