Decentralization in Western Balkans


This project worked on the decentralization process in the following Western Balkan countries: Kosova, Albania, Macedonia, and Bosnia and Herzegovina. These countries have been undergoing a transition from highly centralized to decentralized countries. As such, the main focus of this project was the fiscal decentralization, particularly the transfer of competences from central to local governments, as well as the changes in the revenue structure of local governments. The aim of this project was to see how far these countries have gone, and whether they have managed to successfully abide to their objectives. In order for this project to be completed, primary and secondary data were used. Semi-structured interviews were conducted with relevant institutions’ representatives. Furthermore, official governments’ data were used, along with previous reports, researches, and projects of relevant international organizations and institutions. The evaluation and comparison of the decentralization process in specific sectors of these countries was done based on a subjective scoring of 1-5. The compared sectors consisted of: public utilities, education, total local revenues/state revenues, municipalities’ own revenues and taxation autonomy. The cross-country analysis has shown that:  Kosova has done very well in decentralization of education, and the total local revenues as a percentage of total state revenues reach satisfactory results; however, it is facing serious challenges with the decentralization of public utilities and own revenues of municipalities remain at very low levels.  Albania has taken all necessary measures to decentralize its public utilities, and municipalities’ own revenues represent more than fifty percent of total local revenues; nevertheless, education and local expenditure capacity (shown by local revenues/total state rev ratio) are still lagging behind.  Macedonia has shown improvements in the decentralization of public utilities, education, and own revenues and taxation autonomy; still, its total local revenues/total state revenues ratio continues to be very low.

 BiH has revealed satisfactory results in the decentralization of public utilities, and it has been improving in transferring municipalities more financial resources; yet, education remains highly centralized and the potential of local units to generate own revenues is still highly limited. Finally, based on the analysis, it was concluded that even though these countries have taken most of the initial legislative measures to transfer the competences to local units, the carrying out these competences was frequently hindered by the unwillingness of central governments to give-up their powers, lack of capacity at the local level, or un-harmonized laws. Consequently, it was recommended that:  Municipalities should be given more autonomy over the provision of public utilities, especially in Kosova and Macedonia, and employment of private firms should be supported and encouraged by all countries.  Municipalities should be granted the exclusive competences to provide primary and secondary education, including the school finances, as well as hiring and paying salaries of the teachers. Furthermore, laws concerning education should be clarified and harmonized, so confusion among different levels of governments is avoided.  Central governments of all countries should make sure that the delegation of competences to local units is always followed by the transfer of the necessary resources.  The lack of human capacities at the local levels should be addressed by central governments, through offering training opportunities to needy municipalities.  Central governments should increase taxation autonomy of municipalities through widening of tax rates limits and allowing municipalities to exempt their citizens from specific taxes. In the case of BiH, municipalities should initially be given the right to decide over tax rates.

Publication Date


Document Type

Senior Project

First Advisor

Besnik Bislimi

Second Advisor

Venera Demukaj

Third Advisor

Hajdar Korbi


American University in Kosovo

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