In Chapter 3 we investigate how different governance arrangements can facilitate or hinder education reforms. We explain the decentralisation process that has recently taken place in many countries in order to allow education systems to become more responsive to local needs. We argue that to be successful, decentralisation first requires capacity-building (so that regional governments or local authorities are empowered to make sound decisions) and musy go hand-in-hand with accountability measures to ensure that student outcomes benefit from the new governance arrangements. We also argue that the responsibilities of central government and subnational governments must be clearly defined, in order to avoid endless conflicts about the degree of power that each holds. We pay particular attention to the fact that in most countries the funding is raised largely by central government through taxes, while it is spent by subnational governments, and consider the tensions that this asymmetry creates. We devote a specific section to the rather unique governance arrangements of vocational, education and training systems.