Regional and local governments frequently face restrictions in raising resources to finance present or potential spending. Central authorities often regulate the few local sources of revenue by controlling tax rates, prohibiting increases in user service charges, and limiting the means for revenue collection and enforcement.
Excessive centralization creates difficulties for goods and services that are regional or local, rather than national, in character, such as water supply and sanitation, and even some health and education services. Centralization tends to reduce public accountability and responsiveness to local preferences. The scope for decentralization is greatest in urban areas, but broadening the involvement of rural communities in water supply, irrigation and rural roads can also improve the quality of public services.
The ever-increasing centralization of governmental and organizational functions in the modern world has produced a widespread dissatisfaction and in some cases has become self-defeating. Centralization is associated with delay, bureaucratic red tape, and the erosion of local initiative.
The global-scale accumulation and concentration of finance capital in fewer and fewer hands by banks and transnational corporations, and the accumulation of physical capital equipment for large-scale production under systems of centralized control and decision-making, are paralleled by an increasing intervention of state governments into people's daily lives and by the increasing role played by other large organizations (corporations, unions, political parties, international and national organizations, etc) whose decisions are beyond the control of the individual.