Abstract
M.Com. (Economics)
The purpose of this study is to investigate the economic principles underlying
the decentralization of government to local level in a market oriented
economic system.
In the provision of public goods there is no freedom of choice, decisions
being made by a few individuals. This contrasts with the operation of the
free market mechanism in which millions of subjects make personal and independent
decisions about millions of objects. However, through the decentralization
of government, an effort is being made to involve more subjects in
the making of collective decisions through representatives at all levels of
government.
In South Africa, the problem has a further dimension in that not all population
groups have so far participated fully in the democratic and free market
economy. The new constitutional dispensation provides for a broadening of
democracy, in that non-white population groups are now more and more represented
at central, provincial and local government level.
The role to be played in this regard by municipalities is examined, in order
to highlight the economic principles underlying the decentralization of decision-
making.
The focal point of the study is the way in which decentralization of decisionmaking,
by which government is extended to the inhabitants, is being manifested
at municipal level.
The topics dealt with in this study are:
- the role of government in a market economic system;
- the financing of municipalities;
- the establishment of local authorities;
- the development of infra-structures;
- development strategies;
- the pursuit and growth of economic principles in a new dispensation.
Municipalities have an essential function to perform in the provision of
public goods and in serving as the bearers of democracy. Municipalities can
make a meaningful contribution to the development of a country and its
inhabitants and to the realization of the benefits of the decentralization
of decision-making, in step with the economic principles underlying it.