Design of decision-making : a study in economic administration with reference to Indian economic reform

Traditionally, the most important of these is the hierarchy, with it pyramidal distribution of authority. Equally interesting, however, are what Sah and Stiglitz call polyarchies, systems with parallel independent decision makers (much like market economies), and hierarchies of polyarchies. The choice between these two systems amounts essentially to the choice between centralized and decentralized modes of decision-making and is a question that must be resolved in designing institutions that foster rapid growth. This paper analyzes this choice, both generally and in the particular context of Indian economic development. The analysis makes a case for extensive decentralization of decision making even within government, on the grounds that decentralization reduces the likelihood of corruption, economizes on communication, minimizes the adverse impact of bad decisions or bad decision makers, and opens avenues for administrative improvement. It is also argued that concentrated decision making need not mean greater accountability. In light of this analysis, specific improvements in the distribution of decision making authority in the economic administration of India are suggested. Includes references. (Author abstract, modified)