Every so often some government or another will try exactly what you describe - move offices or even entire ministries out of the capital city into the hinterlands (this is why, for example, the CRA has major operations in places like Summerside or Sudbury). For the most part, they do well in creating entry level jobs for underemployed locals, but "the people' rarely if ever follow, to the point where they end up having to run it remotely from management based in the city because local talent doesn't exist, and the talent in the city refuses to move - they will claim constructive dismissal rather than relocate. The government is a major employer  in Sudbury and has been for decades, but that city still lives and dies on mining. 

The latent inefficiencies in decentralization eventually capture the attention of a subsequent government, who closes down the rural branches and re-centralizes everything.  

Lather, rinse, repeat.