Decentralization the time of centralization. The decentralization

Decentralization is a concept and a method that is used by
most of the states to advance their economies. Usually, the central government
delegates some of its power to local governments in order to achieve an
economic development. Decentralization has proved to be an effective tool for
some countries to advance their economies, however, many times it has had a
blowback effect. To examine the disadvantages of decentralization I have taken
China as an example. To advance its economy, the government of China
decentralized the fiscal policies by delegating more power to the local
governments. Even though decentralization helped the Chinese economy, the side
effects of the process appeared. As a result of decentralization in China, the
inequality between the costal areas and inland areas has grown drastically
(Liu, Vazquez, Wu 252). The costal areas in China were known to be richer than
the inland areas even during the time of centralization. The decentralization
did not solve this problem, conversely, it just exacerbated. First,
decentralization tended to enforce a competition between the regional
governments in China. The costal areas, by being richer were able to attract
more resources and more talent while the poor ones had less potential (Liu,
Vazquez, Wu 252). Second, the investments went usually to the coastal areas
rather than being spread equally in China’s territory. This happened because
the coastal areas could afford more to give tax breaks to the companies than
the inland areas (Liu, Vazquez, Wu 252). Third, as a result of
decentralization, the regional governments were forced to rely on their own
revenues that they raised. As a consequence, the central government role in
redistributing the wealth from rich areas to poor areas was weakened, resulting
in higher inequality (Liu, Vazquez, Wu 252). Fourth, the coastal areas by
having more resources, were able to exert more influence in decision making,
and often would impact the decisions of the central government to offer more
resources to the coastal areas (Liu, Vazquez, Wu 253).Decentralization is a concept and a method that is used by
most of the states to advance their economies. Usually, the central government
delegates some of its power to local governments in order to achieve an
economic development. Decentralization has proved to be an effective tool for
some countries to advance their economies, however, many times it has had a
blowback effect. To examine the disadvantages of decentralization I have taken
China as an example. To advance its economy, the government of China
decentralized the fiscal policies by delegating more power to the local
governments. Even though decentralization helped the Chinese economy, the side
effects of the process appeared. As a result of decentralization in China, the
inequality between the costal areas and inland areas has grown drastically
(Liu, Vazquez, Wu 252). The costal areas in China were known to be richer than
the inland areas even during the time of centralization. The decentralization
did not solve this problem, conversely, it just exacerbated. First,
decentralization tended to enforce a competition between the regional
governments in China. The costal areas, by being richer were able to attract
more resources and more talent while the poor ones had less potential (Liu,
Vazquez, Wu 252). Second, the investments went usually to the coastal areas
rather than being spread equally in China’s territory. This happened because
the coastal areas could afford more to give tax breaks to the companies than
the inland areas (Liu, Vazquez, Wu 252). Third, as a result of
decentralization, the regional governments were forced to rely on their own
revenues that they raised. As a consequence, the central government role in
redistributing the wealth from rich areas to poor areas was weakened, resulting
in higher inequality (Liu, Vazquez, Wu 252). Fourth, the coastal areas by
having more resources, were able to exert more influence in decision making,
and often would impact the decisions of the central government to offer more
resources to the coastal areas (Liu, Vazquez, Wu 253).