Governmental capacity consists of three major components. First, institutions at all levels, central, local, public, and private, must have sufficient authority to undertake their assigned roles. Second, adequate financing is necessary to implement governmental responsibilities. Third, good leadership is needed to assure that authority and resources are used wisely. Governments seeking to decentralize must consider many fundamental issues regarding allocations of authority and finances, the strength of local leadership, and the structuring of central institutions.
