Decentralizing for performance? A quantitative assessment of functional reforms in the German Länder

Abstract

In the last 10 years, the governments of most of the German Länder initiated administrative reforms. All of these ventures included the municipalization of substantial sets of tasks. As elsewhere, governments argue that service delivery by communes is more cost-efficient, effective and responsive. Empirical evidence to back these claims is inconsistent at best: a considerable number of case studies cast doubt on unconditionally positive appraisals. Decentralization effects seem to vary depending on the performance dimension and task considered. However, questions of generalizability arise as these findings have not yet been backed by more ‘objective’ archival data. We provide empirical evidence on decentralization effects for two different policy fields based on two studies. Thereby, the article presents alternative avenues for research on decentralization effects and matches the theoretical expectations on decentralization effects with more robust results. The analysis confirms that overly positive assertions concerning decentralization effects are only partially warranted. As previous case studies suggested, effects have to be looked at in a much more differentiated way, including starting conditions and distinguishing between the various relevant performance dimensions and policy fields. Points for practitioners In multi-level systems, reformers of public administration have to decide which level is most appropriate for the implementation of a certain task. In the last years, reformers have often decided to decentralize state functions in the hope of creating an effective and efficient government. Yet, in reality, the claim to deliver public tasks better and, at the same time, cheaper in decentralized units proves unfeasible. We provide empirical evidence on the performance effects of decentralization and show that it has other advantages and other disadvantages compared to state service delivery. Reformers of public administration have to ponder these pros and cons in each particular case.