Devolution: Meaning & Definition

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Meaning of Devolution

Devolution is an economic concept based on the disintegration or atomization of powers within an organization, company or state. This supposes the dispersion of decision-making and resources in different hierarchies or regions.

Devolution: Meaning & Definition

Devolution

The denomination decentralization implies the need to divide the concentration of power in a society or a country due to various reasons. Among these reasons, there are some such as its size, the amount of economic activities, resources it has, or even a low level of state intervention.

In other words, it means that the concentration of authority or economic decision-making capacity is lower. At the same time, it means that responsibility is shared among the various implementers of economic policies.

Conceptually it is the opposite of the phenomenon of centralization, both at the microeconomic and macroeconomic levels.

Decentralization at the Microeconomic Level

It is usually established that the emergence of devolution at the level of commercial companies responds to the need to distribute authority and corporate decision-making among various hierarchical points.

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This happens in most cases in large companies, or that cover different and different markets simultaneously and even with multinational life. In this way it is easier to control its operation and the creation of profit. Since, in this way, the specific needs of each branch of the organization are known.

Devolution can come hand in hand with job specialization. Although, you can even favor it by attending to the specific needs of the different points of your organization chart. This happens as there are different administrative areas (legal, tax, labor …) and different decision makers more focused on each subject.

Decentralization at the Macroeconomic Level

The distribution of power, production factors, infrastructures or economic resources in decentralized countries supposes the existence of a distribution map of regional or territorial administrations that are in charge of exercising authority in the political and economic sphere.

Thus, the weight of the central state in the day-to-day life of society is reduced, as there is an authority more focused on the autonomy or even on the results of the free market . This implies a greater scope of freedom in terms of greater volatility in price levels, fewer generic restrictions and more attention to the specific needs of each region.


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