Devolution is the transfer of power from a national government to subnational (e.g., local, regional or state) authorities. Devolved regions have the power to make laws relevant to the area. There are several ways in which devolution helps to improve the economy.
In many countries, economic activity is concentrated in a few large cities. Having all economic activity in one area limits the range of services and industries in which a country can excel. Not even the largest city can do every activity.
Centralisation has many drawbacks related to the people’s inability in departmental offices in large cities to know adequate detail about local economic issues. Whether it is particular problems facing regions whose inhabitants are struggling with various deprivations and problems, or skills needed of local employees, the information required to address the challenges is only available locally. It is reasonable to believe that national economic growth would improve if each region is able to grow faster in its area of specialism.
Growth in various regions does not occur spontaneously because the political and physical infrastructure has not been available for more geographically balanced development. Market forces take activity and people towards certain regions because they operate within policies controlling them in that direction. Therefore, devolution of powers to improve other cities is key investment decision to improve all regions.