Coordinating for Cohesion in the Public Sector of the Future

Outsourcing and decentralization trends

As regards government outsourcing evolution, data is available for 10 countries from 1980 to 2010, 14 countries from 1990 and all 18 from 1995 onwards. Of the group of 10 countries, the rate of outsourcing increased in all countries, led by the Netherlands, Finland, Portugal, the UK, Germany and Belgium. Between 1995 and 2010, outsourcing increased across all countries – except Estonia and Norway – at an average of 4.6 %age points reaching an average ratio of 48.61% of final government consumption.
The weight of final government consumption varied considerably, ranging from nearly 32% in Greece to nearly 69% in the Netherlands. Countries with the highest outsourcing ratios in 2010 were: the Netherlands, Germany, Finland, UK, Belgium and Luxembourg, with ratios above 50% of the final government consumption, whilst Greece and Denmark had the lowest ratios, below 40%.

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Regarding the expenditure decentralization indicator data is available for 5 countries 1980-2010, 9 countries 1990-2010, 17 countries from 1995 and all 18 from 2000. Looking at this group of 5 countries, decentralization grew strongly only in Belgium from the 1990s onwards, mainly as result of the federalization of this country, but remained relatively stable in Finland, Italy, the Netherlands and Portugal. Turning to the group of 17 countries, increased ratios of expenditure decentralization between 1995 and 2010 were found in Spain (nearly 23 %), Italy (nearly 12 %), Sweden, Denmark and Finland, at around 10 %. Smaller increases were found in Belgium, Germany, France, Greece, Hungary, Portugal and the UK whilst reversals of decentralization occurred in Ireland (23 %) and the Netherlands (nearly 11 %) and, to a lesser extent, Luxembourg, Estonia and Austria.

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The evolution of public employment decentralization mirrors closely that of expenditure decentralization, which is unsurprising, given the high degree of correlation found between the two variables. Data includes 7 countries from 1980 to 2010, 13 from 1990 and 18 from 1995. As seen in expenditure decentralization, of the first group of 7 countries, only Belgium witnesses a dramatic increase in administrative decentralization, occurring largely early on, during the 1980s. Between 1995 and 2010, Spain led the way in administrative decentralization, increasing by over 24 %. Ireland, as previously, saw the biggest reversal (nearly 28 %), followed by Norway, at nearly 14 %. Overall, the average ratio for administrative decentralization remained steady between 1995 and 2010, at around 50 %.

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As regards the degree of autonomy of the countries analyzed, measured as the share of transfers in sub-national revenues, we observe that countries with lower ratios, ie those with greater autonomy as measured here, are Austria and Germany, both of which are federal countries. The cases of Spain and Belgium are interesting because, whilst being federal countries, the degree of autonomy of decentral units as measured by this indicator is not very high; indeed, Belgium’s shares is actually higher than the average of the 18 countries. This may indicate that, in this case, revenues of regions are dominated by transfers from the federal or central government. Regarding the evolution of the degree of autonomy, different patterns can be seen. On the one hand, there is a group of countries whose autonomy measured by this indicator increases between 1995 and 2010, particularly, Italy, Ireland and Austria. There is another group of countries where the autonomy of sub-central governments decreased in the same period: Norway, Denmark, France and Luxembourg. The other countries remained quite stable during this period.

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This page has been modified on 17 January 2012