The Economics of Decentralization: A Review of the Literature and the Case of Education Provision

Abstract

This paper reviews the economic rationale for and against decentralization with particular attention to the organization and delivery of education. The paper frames the overview within the standard efficiency-equity trade off and highlights the increasingly important role of incentive mechanisms, accountability, and citizens' participation. The discussion then turns to the issues that are specific to decentralizing education, including the pros and cons of financing schools from local taxes, and a taxonomy and description of institutional arrangements around the world. A brief review of evaluation studies of decentralization reforms in education concludes the paper.