Building a decentralization index in Portugal: A proposal on conceptual and methodological foundations
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Teles, Helena; Júnior, Temístocles Oliveira; Caeiro, Joaquim Article Building a decentralization index in Portugal: A proposal on conceptual and methodological foundations Administrative Sciences Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Teles, Helena; Júnior, Temístocles Oliveira; Caeiro, Joaquim (2025) : Building a decentralization index in Portugal: A proposal on conceptual and methodological foundations, Administrative Sciences, ISSN 2076-3387, MDPI, Basel, Vol. 15, Iss. 5, pp. 1-16, https://doi.org/10.3390/admsci15050187 This Version is available at: https://hdl.handle.net/10419/321331 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/
Received: 12 December 2024 Revised: 11 April 2025 Accepted: 2 May 2025 Published: 20 May 2025 Citation: Teles, H., Júnior, T. O., & Caeiro, J. (2025). Building a Decentralization Index in Portugal: A Proposal on Conceptual and Methodological Foundations. Administrative Sciences,15(5), 187. https://doi.org/10.3390/ admsci15050187 Copyright: © 2025 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/ licenses/by/4.0/). Article Building a Decentralization Index in Portugal: A Proposal on Conceptual and Methodological Foundations Helena Teles * , Temístocles Oliveira Júnior and Joaquim Caeiro Instituto Superior de Ciências Sociais e Políticas, Centro de Administração e Políticas Públicas, Unidade de Coordenação de Serviço Social e Política Social, Universidade de Lisboa, 1300-663 Lisbon, Portugal *Correspondence: [email protected] Abstract: Decentralization is a process that allows local governments to play a more active role in decision-making and the management of public policies. This process involves transferring responsibilities, resources, and authority from central to local governments, bringing the decisions and provision of public services and policies closer to the needs of citizens in each region. Portugal established a regime for asymmetric, multi-level, and multisectoral decentralization governance that is primarily focused on the policy (administrative) dimension. This study proposes conceptual and methodological foundations for building a decentralization index in Portugal aimed at measuring and comparing its outcomes across municipalities and policy areas of the social domain. The conceptual foundations enable a model that combines the state capacity concept with the three-dimensional decentralization theory, defining a framework of dimensions, objectives, and principles with potential indicators for a future index. The methodological cornerstones provide a qualitative scheme for determining the indicators that should comprise the decentralization index, data collection, processing methods, and analytical strategies. Although decentralization in Portugal dates back to the mid-2010s and the transfer of competences is formally complete as of 2023, at least in the social domain, its evaluation falls short of what is needed, including measuring its results in this domain. This study aims to present proposals that address these gaps and encourage a critical debate on decentralization, its frameworks, processes, and results. Keywords: decentralization; measurement; Portugal 1. Introduction Decentralization is a fundamental pillar of the reform agenda in many countries, including Portugal. This concept is associated with regimes and processes that empower subnational jurisdictions to decide, manage, and deliver public policies. It involves transferring responsibilities, resources, and authority from the central to local governments to ensure effective responses to citizens’ demands (Falleti,2010;Harguindéguy et al.,2019; OECD,2019). Portugal established a regime for asymmetric, multi-level, and multi-sectoral decentralization governance that is primarily focused on the policy (administrative) dimension. This decentralization regime outlined a transfer process that produced varying results across municipalities and policy areas, including those related to education, health, and social action, which form the social domain (Assembleia da República,2013,2018a;DGAL, 2023b;Tribunal de Contas de Portugal,2023). This study proposes conceptual and methodological foundations for building a decentralization index in Portugal aimed at measuring and comparing its outcomes across Adm. Sci. 2025,15, 187 https://doi.org/10.3390/admsci15050187
Adm. Sci. 2025,15, 187 2 of 16 municipalities and policy areas of the social domain. To this end, it examines legislation and reports on decentralization in Portugal, the technical and scientific literature on the subject, and public policy evaluation and indicators. These conceptual foundations enable a model that combines the state capacity concept with the three-dimensional decentralization theory, defining a framework of dimensions and Portuguese decentralization’s objectives and principles with potential indicators for a future index. The methodological cornerstones provide a qualitative scheme for determining the indicators that should comprise the decentralization index, data collection, processing methods, and analytical strategies. Although decentralization in Portugal dates back to the mid-2010s and the transfer of competences has been formally completed since 2023, at least in the social domain (see DGAL,2023a,2023b,2024), its evaluation falls short of what is needed, including the measurement of its results in such a domain (Tribunal de Contas de Portugal,2023). Furthermore, no indices, models, or panels were found to provide a comprehensive and coherent assessment of decentralization results; instead, there were only efforts limited to specific areas, such as health or education, or to municipalities or groups (see OECD, 2020). This study aims to present proposals that address these gaps and encourage a critical debate on decentralization, its frameworks, processes, and results. 2. Overview of the Decentralization Process in Portugal Before proposing the foundations of a decentralization index in Portugal, this study provides an overview of recent decentralization in this country’s context, highlighting its remarkable relevance and secular dimension as a crucial issue throughout the formation and evolution of the national state. In other words, Portugal was marked by periods between more centrifugal or centripetal power distribution since its monarchical era, which began in the 12th century and continued during its republican contemporaneity from 1910 onwards (Caeiro,2015,2018). The decentralization process in the current Portuguese democracy has, as its primary milestones, Articles 6 and 237 of the 1976 Constitution, which attributed a constitutional status to subsidiarity, the autonomy of local governments, and administrative decentralization. However, this process only gained traction after the massive fiscal crisis at the end of the 2000s and the conditionalities for international assistance in the early 2010s (Ministério Adjunto e dos Assuntos Parlamentares,2011;OECD,2020;Silva,2017). The legal framework of decentralization emerged in this context and was inaugurated by Law nos. 75/2013 and 73/2013 that approved the Legal Regime for the Transfer of Competences (RLTC) and the Financial Regime for Local Authorities and Intermunicipal Entities (RFALEI) (Conselho de Ministros,2012;Silva,2017). The basic outline of this process was completed after five years by Law no. 50/2018, the ‘Framework Law’ on the transfer of powers to local authorities and intermunicipal entities, and Law no. 51/2018, which created the Decentralization Financing Fund (FDD), including it in the RFALEI. The decentralization regime that emerged from this legal framework in Portugal focuses on the administrative (or policy) dimension, which is better explained in the next section. Furthermore, such a process follows the premise that transferring competences brings decisions and implementation of public policies closer to citizens and should be aimed at the following: 1. Improving the quality of public services to populations; 2. Enhancing universality and equality of access to public services; 3. Ensuring permanent and transparent monitoring; 4. Promoting social participation in the evaluation of decentralized services; 5. Amplifying the efficiency and effectiveness of public management;
Adm. Sci. 2025,15, 187 3 of 16 6. Promoting territorial cohesion; 7. Reinforcing interregional solidarity; 8. Promoting institutional and social articulation, including at inter-levels; 9. Guaranteeing local financial, administrative, and organizational autonomy; 10. Transferring financial, human, material, and infrastructure resources; 11. Ensuring stabilized funding for the transferred competences; 12. Preventing the increase in overall public expenditure (Assembleia da República,2013, 2018a;Tribunal de Contas de Portugal,2023). To achieve these objectives, the Portuguese regime is based on three institutional pillars: principles and guarantees, a decentralization arrangement, and the distribution of new subnational competences by policy areas. Regarding the first pillar, the principle of universality refers to the national government’s duty to transfer competences and respective resources within the scope of decentralization to all municipalities. However, such a transfer must be conditioned by the characteristics of municipalities; that is, this process should be paced and oriented towards subnational jurisdictions that are most suitable for exercising it (Assembleia da República, 2013,2018a). There are two principles focused on the concretization process of decentralization. First, the transfer of competences should occur gradually at a pace that depends on sectoral regulations related to each policy area and the characteristics of subnational authorities. Second, this process and its associated resources are subject to ongoing and transparent monitoring (Assembleia da República,2018a). The other principles are more linked to decentralization objectives. The guarantees to local authorities determine that the transfer must also preserve their financial, administrative, and organizational autonomy. In addition, financial, human, and material resources, as well as physical structures, should also be transferred to them to support the new competences. Furthermore, intervenors from such jurisdictions must have access to the information the national administration uses to manage this process as well as competences. Additionally, stable funding must be available to implement the transferred competences (Assembleia da República,2018a,2018b). Finally, territorial cohesion and equal access ensure that the transfer of competences aims to mitigate disparities between territories and deliver better public policies to the population without undue differences and in a manner that reduces social and economic inequalities. Other principles of decentralization include the pursuit of quality in public services and the enhancement of the effectiveness and efficiency of public management (Assembleia da República,2018a). The pillar related to the decentralization arrangement represents a multi-level set of structures. At the national level are the Central Administration (CA), the Regional Coordination and Development Commissions (CCDR), and the Decentralization Monitoring Commission (CAD). At the subnational level are the intermunicipal entities (EIM), local authorities (LAs), and parish councils (PCs) (Assembleia da República,2013,2018a; OECD,2020). It is worth noting that the sectoral regulations on decentralization for each policy area also establish diverse technical, monitoring, and oversight commissions, which vary in terms of location within the government levels and duration, even among the most relevant areas related to ‘social domains’ (Tribunal de Contas de Portugal,2023, p. 75). Regarding social action, the monitoring commission is national and permanent, whereas in education and health, it is municipal and has a mandate that expires on 31 December 2026 (Conselho de Ministros,2019a,2019b,2020,2022a,2023).
Adm. Sci. 2025,15, 187 4 of 16 The CA represents the set of central government bodies responsible for territorial cohesion and decentralization at that level, with emphasis on the General Directorate for Local Authorities (DGAL) (Assembleia da República,2013;OECD,2020). In addition, it includes the various national bodies responsible for the policy areas and public services involved in decentralization, transferring their competences and influencing the process, such as some units and committees within the structures of ministries related to education, health, and social action (Conselho de Ministros,2019a,2019b,2020;OECD,2020). The CAD was established with a duration of up to 31 December, 2024, to oversee the process and assess the adequacy of financial resources, comprising representatives from parliamentary groups, the national government, the National Association of Portuguese Municipalities, and the National Association of Parishes (Conselho de Ministros,2022b). The CCDRs deconcentrate specific responsibilities of CA bodies across different regions, focusing on coordinating environmental policies, territorial planning, and regional development while also supporting LAs and associations at the subnational level (Assembleia da República,2013;OECD,2020). The EIMs represent voluntary associations of municipalities or groups of municipalities. These entities have their governance bodies, including an intermunicipal assembly composed of members elected by the assemblies of the member municipalities and an intermunicipal council comprising the mayors of the respective municipalities. They perform various functions, including developing regional strategic plans, coordinating public investment, managing community funds, and implementing regional development projects (Assembleia da República,2013;OECD,2020). The LAs represent the 278 municipalities on the mainland and are the core target of the decentralization process. In some cases, competences delegated to LAs can be transferred to PCs, which become responsible for delivering public policies to the populations of the respective parishes within the municipalities (Assembleia da República,2013,2018a). The pillar of the distribution of new competences defines which powers and responsibilities among policy areas fall within the scope of decentralization. Also, it ensures that each of these areas has its sectoral regulation and arrangement, as mentioned earlier. The decentralization regime established at least 20 areas for transferring, covering those of great strategic and financial importance, such as policies linked to the social domain, and others related to specific topics, such as beaches, housing, and port areas, that can be better leveraged locally (DGAL,2024;Tribunal de Contas de Portugal,2023). The existence of numerous areas is particularly notable when combined with the fact that the principle of universality of the transfer is mediated by differentiation among the nature of policy areas and the characteristics of municipalities. The reports’ findings by DGAL and the Portuguese Court of Accounts highlight the existence of imbalances between subnational jurisdictions in assuming and implementing the new competences among policy areas (DGAL,2024;Tribunal de Contas de Portugal, 2023,2024). There are also indications of challenges arising from differences in the governance of decentralization across sectors and limitations of financial resources, including those from FDD (DGAL,2024;Tribunal de Contas de Portugal,2023,2024), a situation that suggests this may represent another relevant factor contributing to such imbalances. Among other findings noted by the Court of Auditors is the lack of up-to-date studies to guide the planning and sizing of the resources to be made available, which also makes it possible to establish the parameters that indicate efficiency gains or the applicable financial criteria and the lack of comprehensive data, which prevents a national view, and it is also striking (Tribunal de Contas de Portugal,2023). Essentially, as outlined in Report no. 4/2023 in the second section, it recommends “ensuring the functioning of an integrated
Adm. Sci. 2025,15, 187 5 of 16 follow-up, monitoring, and evaluation structure, capable of providing decision support” (Tribunal de Contas de Portugal,2023, p. 80, in free translation). Therefore, the Portuguese regime has established an intriguing multi-level and multisectoral governance system, which also exhibits characteristics of asymmetric decentralization, as proposed by Allain-Dupré et al. (2020) and OECD (2019). Furthermore, its decentralization process represents more of a systematization of parallel pathways of transferring competences between different policy areas than a single process. From this overview, this study assumes that, despite various factors such as COVID that may have influenced decentralization, and although the transfer of competences has been formally completed since 2023, at least in the social domain (see findings from DGAL, 2023a,2023b,2024), such a process likely resulted in varied levels of achievement regarding its objectives across municipalities and policy areas in this domain. Considering this scenario, a thorough search was conducted in the development of this study for models, indicators, and methodologies that enable the comprehensive measurement and comparison of decentralization results between policy areas and municipalities. The only information found indicated the existence of efforts limited to specific areas, such as health or education, or municipalities or groups of them (see OECD,2020). 3. Conceptual Model for the Assessment of Portuguese Decentralization Here, this study proposes a model that provides the conceptual foundations for a comprehensive and coherent assessment of decentralization in Portugal, serving as a first step to address the gap identified in the previous section. The concept of decentralization is commonly associated with reforms or regimes that empower subnational jurisdictions to decide, manage, and deliver public policies. It involves transferring responsibilities, resources, and authority from the central to local governments to ensure effective responses to citizens’ demands (Falleti,2010;Harguindéguy et al.,2019;OECD,2019). This general conceptualization enables us to assume that the theoretical results of decentralization can be divided into two levels. First, it should create, enhance, or amplify these responsibilities, resources, and authority in subnational governments as ‘outputs’. Second, it assumes the premise that such governments, endowed with these greater ‘capacities’, should be able to design and deliver better public services and policies in response to the needs of their populations and territories as ‘outcomes’. The proposed model assumes that, at first glance, the state capacity concept can be used to approach the expected general decentralization’s outputs and outcomes. Recent studies on decentralization and local governance have adopted the state capacity lens from a Weberian perspective, defining it as the combination of administrative, political, technical, and relational powers, abilities, and resources governments employ to achieve policy objectives, create social value, and deliver public goods (Grin et al.,2023;Weiss,1998; and Williams,2020). The literature addresses the relationship between decentralization and subnational state capacities in two ways. Most studies explore how prior local capacities are a prerequisite for the success of decentralization processes (Bellofatto & Besfamille,2018;Di Maro et al.,2022;Grin et al.,2023). Other comparative and case studies highlight experiences where the limitations of decentralization processes in building capacities at the local level have resulted in poor social and economic outcomes in target municipalities (Ahmad & Talib,2014;Bossert & Mitchell,2011;Fiszbein,1997;OECD,2019;Rumbach,2016;Setiawan et al.,2022). Upon closer examination, this conceptual model is enriched by combining state capacity with the three-dimensional theory of decentralization. The prevailing perspective in the
Adm. Sci. 2025,15, 187 6 of 16 literature, international frameworks, and government proposals indicates that decentralization can be divided into the dimensions below: • The policy dimension entails the transfer of competences for formulating, regulating, implementing, monitoring, and evaluating public services and policies. It should also encompass the transfer of human resources, expertise, information, physical infrastructure, assets, and the necessary financial resources to support them. These policy capacities should lead to more suitable public services that meet citizens’ demands, expand opportunities for universal and equal access, and achieve a more efficient and effective public administration. • The fiscal dimension involves transferring powers to manage revenues and expenditures by increasing mandatory financial transfers, introducing new subnational taxes, or granting subnational jurisdictions the fiscal authority to establish their taxes. It can also include empowering local governments to develop fiscal rules, define their budgets, expand their debt or funding, and participate in financing programs from international or private funds. These fiscal capacities should lead subnational governments to a more coherent and stable fiscal framework for financing their public services and policies towards the demands of each municipality. • The political dimension refers to the transfer of political authority, enabling municipalities to conduct their elections. Beyond this, it involves guaranteeing autonomy in agenda setting and decision-making, as well as articulating with other governments, bodies, and entities of various natures and levels, while promoting social participation, transparency, accountability, and public engagement in affairs. These capacities must allow for prioritizing the interests and needs of the local population of each municipality in the design and implementation of services and policies as well as for reinforcing the participation of the various stakeholders and the cooperation between other institutional intervenors (Falleti,2010;Grin et al.,2023;Harguindéguy et al., 2019; and OECD,2019). This subdivision does not imply that these dimensions cannot be combined in decentralization reforms. That is, even if in-depth or comparative case studies suggest that specific reforms were more concentrated in one dimension or followed in long trajectories, for different sequences between policy, fiscal, and political reforms, subnational governments should commonly assume responsibilities, resources, and powers related to the three dimensions (Falleti,2010,2013;Silva,2017; and Tavares et al.,2018). Examining the Portuguese case by this conceptual model, as shown in Table 1, it is possible to indicate that while some objectives and principles addressed in the previous section represent the expected policy, fiscal, and political capacities to be transferred to subnational jurisdictions as outputs, others can be associated with the expected outcomes in this three-dimensional division. This approach is even more fruitful when considering an assessment of Portugal by the OECD and the European Committee of the Regions’ decentralization index. Their results confirm that the decentralization regime focuses on the policy dimension, but it has generated state capacities at the local level in the three dimensions. Furthermore, both suggest that Portugal has an upper level in the political dimension of decentralization, a regular level in the policy dimension, and a lower level in the fiscal dimension (European Committee of the Regions,2020;OECD,2020).
Adm. Sci. 2025,15, 187 7 of 16 Table 1. Preliminary conceptual model for the assessment of Portuguese decentralization. Dimensions Objectives and Principles Type of Result Policy Universal transfer (to all municipalities) of competences within the scope of decentralization Output Transfer of financial, human, material, and infrastructure resources Output Access to all the information needed for the new competences Output Improvement of the quality of public services to local populations Outcome Promote territorial cohesion for the balanced and harmonious development among municipalities Outcome Enhancement of universality and equality of opportunities for access to public services Outcome Increase in efficiency and effectiveness of (local) public management Outcome Recognition of the administrative and organizational autonomy of subnational governments Outcome Fiscal Establishment of stable funds for financing the decentralization process Output Maintenance of overall public expenditure levels (by municipality and by area) Outcome Recognition of the financial autonomy of subnational governments Outcome Political Guarantee of permanent and transparent monitoring of decentralization Output Promotion of social participation in the evaluation of decentralized services and policies Output Reinforcement of interregional solidarity Outcome Promotion of institutional and social articulation, including at inter-levels Outcome Source: own elaboration, 2024. These findings from the OECD and the EU Committee suggest potential explanations for the observed variation in the number of objectives and principles across the different dimensions. The emphasis on the policy dimension is linked to the underlying premise of the process, which reflects the designation of Article 236 of the Constitution as ‘administrative decentralization’. With regard to the political dimension, it is essential to note that these findings indicate a higher degree of political decentralization, which may be a reason for the existence of less related objectives. No evidence was identified to clarify the underlying rationale regarding the lower prioritization of the fiscal dimension. A further step is required towards a conceptual model that enables the evaluation of decentralization in Portugal, allowing for the measurement and comparison of the achievement of its objectives across municipalities and policy areas. The public policy literature discusses various indicators for measuring, analyzing, and monitoring (Amado, 2020;Neto & Gehlen,2018;IPDET,2007;Kusek & Rist,2004). In this sense, indicators are crucial for evaluating the extent, effectiveness, and impact of public policies and establishing a monitoring system (Neto & Gehlen,2018).
Adm. Sci. 2025,15, 187 8 of 16 Table 2presents some potential indicators for Portuguese decentralization that can capture and convey these results, considering the proposed municipal and sectoral granularity. The indicators generated by this model should enable the identification of territorial disparities by policy area, revealing uneven implementation patterns and supporting more context-sensitive strategies. Beyond this, they must allow for the systematic evaluation of decentralization outputs and outcomes, guiding evidence-based policy adjustments and improving the alignment between objectives and actual performance. Table 2. Final conceptual model of the Portuguese decentralization. Dimensions Objectives and Principles Potential Indicators by Municipality and Areas Policy Universal transfer (to all municipalities) of competences within the scope of decentralization •Competences transferred from AC bodies •Competences assumed by subnational governments Transfer of financial, human, material, and infrastructure resources •HR transferred from the AC bodies to support new competences • Financial resources transferred from the central government to support new competences •Material resources and infrastructures transferred from the AC bodies to support new competences Access to all the information needed for the new competences •Information on decentralized policies available for the AC bodies •Information on decentralized policies available for subnational governments Improvement in the quality of public services to local populations •User satisfaction with decentralized public services •Rate of timely resolution of service requests and processes Promotion of territorial cohesion for the balanced and harmonious development among municipalities •Unbalance in economic dimensions across various topics (GNP, unemployment rate, purchasing power per capita, etc.) •Unbalance in social dimensions across various topics (average life expectancy, early school leaving rate, population with higher education, doctors per inhabitant, social response coverage rate, etc.) •Unbalance in the environment and sustainability across various topics Enhancement of universality and equality of opportunities for access to public services •Population with access to essential public services in their municipality of residence •Coverage rate of decentralized services per target group •Territorial disparity in access to decentralized public services
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