ABSTRACT
All around the world in matters of governance, decentralization is the rage. Even apart from the widely debated issues of subsidiarity and devolution in the European Union and states’ rights in the United States, decentralization has been on the center stage of policy experiments in the past two decades in a large number of developing and transition economies in Latin America, Africa, and Asia. The World Bank, for example, has embraced it as one of the major governance reforms on its agenda (many World Development Reports of recent years as well as other bank documents give the matter a great deal of prominence) (e.g., see World Bank 1999, 2000). Taking just the two most populous countries in the world, China and India, decentralization has been regarded as the major institutional framework for China’s phenomenal industrial growth in the past two decades (taking place largely in the nonstate, nonprivate sector); and India ushered in a fundamental constitutional reform in favor of decentralization around the same time that it launched a major program of economic reform.
