ABSTRACT
The distribution of responsibilities among the various levels of governments in a federal or unitary system is of increasing interest for economists and politicians alike. The question of whether activities such as resource allocation, income distribution and stabilisation policies should be carried out by central government alone or should be distributed among the various levels of government is of great relevance to many countries. This increasing interest seems to be related to both the reaction of local communities to centralisation due to the globalisation of the economy and the needs of modern economies which favour the development of centralised institutions. In this light the decentralisation of political and economic functions to lower government levels is seen as an instrument to enhance autonomy and efficiency.
