The principle that decisions on policy should be taken at the most decentralized level consistent with making them effective. Decisions affecting the global atmosphere, for example restrictions on the use of chlorofluorocarbons, need to be taken at an international level. Decisions on safety standards for vehicles need to be taken at a national or possibly supranational level. There is a to be centralized, from local authorities to national governments, and from to be centralized, from local authorities to national governments, and from national governments to supranational bodies such as the European Union. The main arguments for subsidiarity are, first, that there are so many decisions to be taken that the centre should not he swamped in detail; and, second, that there are national and local variations in income levels, traditions, and social attitudes. So that common rules which are hardly noticed in one area, where formalize established habits, would be regarded as so unusual as to be unenforceable in others.
Reference: Oxford Press Dictonary of Economics, 5th edt.