Decentralization without Subsidiarity. Some Additions to Modernization of Hungarian Model of Local Government System

Abstract

The aim of this paper to analyse the experiences of Hungarian decentralization in particular the municipal economy. The analysis describes the main features of so called Hungarian model of municipal economy. It characterized by less effective decentralization and the system has worked as a "conflict container". The role of incentives is also discussed.

The main results of the paper are the follovving conclusions:

- The Hungarian model can be considered a kind of mixture of various European models. There is no compulsory municipal financing model in the EU.

- The Hungarian way of decentralisation of state public services shows that expenditure assignments and rules of intergovemmental affairs are conflicted.

- There is an high level of de jure freedom of local decision making and contradictory to this financial system.

As a consequence of the erosion of the system calls for the reform of Hungarian local govemment system.