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Going local: why sub-national governments are the key to success in Asia

07 Nov 2013
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Engagement with sub-national governments in Asia, including by Australian sub-national governments, will be fundamental to enhancing Australia’s prosperity and wellbeing in the Asian Century. To understand why, we need to understand how sub-national jurisdictions work in Asia.

Extract: The reality is that the task of governing in Asian states usually falls to sub-national governments. China, for example, has a higher percentage of spending at sub-national jurisdictions than any other country.

This means there are considerable levels of regional pride that are often seen as being more important than one’s national pride. It means that most sub-national jurisdictions have their own language, not to mention culture and identity. Often they will have a dominant ethnicity or religion.

Finally, it means that central governments have a complicated relationship with sub-national governments. They clearly wish to control these governments and stop regional fiefdoms, cliques or separatist movements developing – but at the same time, they know that they need to delegate many of the tasks of governing to these jurisdictions.

The method used by most central governments to deal with this dilemma is to encourage competition between different sub-national jurisdictions. This so-called “yardstick competition” is thought by some scholars to have been vital to the development of the Chinese economy, for example.

Understanding this competition is vital for Australia. The story of how Japan-style centralisation in Asia came up against stubborn local institutions and traditions explains why we need to engage more with sub-national jurisdictions – because that engagement allows us to have more clout than we might have under “normal” conditions.

JOHN DENTON is Partner and CEO of Corrs Chambers Westgarth, and a member of the Asialink Board. He helped to prepare the White Paper on Australia in the Asian Century and is on the Strategic Advisory Board that advises the federal government on policies and programs that will enable Australia to make the most of the Asian Century. This article is based on a presentation by Mr Denton to the Victorian Leadership Development Centre’s Senior Executive Leadership Program.

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