The term decentralization entered the vocabulary in the 1820s as political debates shifted across Europe. This occurred after the post-Revolution French Directory leadership created a new government structure that introduced the word centralisation into common usage in 1794.
Four major forms exist within public administration frameworks including deconcentration, delegation, devolution, and divestment. Deconcentration shifts responsibility to existing districts under direct central control while delegation passes down responsibility including finance and implementation to special projects or service districts. Devolution transfers these responsibilities entirely to regional or state governments and divestment involves contracting out services to private companies or relinquishing all responsibility for functions.
Norman Johnson of Los Alamos National Laboratory wrote in a 1999 paper defining a decentralized system where some decisions are made without centralized control. He noted that an important property of agent systems is the degree of connectivity between agents and if each agent exchanges states or influences with all other agents then the system becomes highly connected.
A notable example occurred in 1999 when the United Kingdom's Labour Party created a semi-autonomous Scottish Parliament to neutralize threats from the Scottish National Party. This political decentralization signifies a reduction in national government authority over policy-making through institutional reforms.
Free market ideas popular in the 19th century returned to prominence during the 1970s and 1980s through economists like Friedrich von Hayek. Austrian School theorists believe this system coordinates actions through price signals rather than top-down commands while Eleanor Doyle wrote that economic decision-making is decentralized across all individuals dispersed in each market.