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The economic (in)efficiency of devolution

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Author Info

  • Andr�s Rodr�guez-Pose
  • Adala Bwire

Abstract

The recent devolutionary trend across the world has been in part fuelled by claims of a supposed 'economic dividend' associated with the decentralization of authority and resources. The capacity of devolved administrations with greater autonomous powers to tailor policies to local preferences, to generate innovation in the provision of policies and public services, and to encourage greater participation and be more accountable is supposed to deliver greater economic efficiency. There is, however, little empirical evidence to substantiate these claims. In this paper we assess the horizontal link between devolution and regional economic growth in six national contexts (Germany, India, Italy, Mexico, Spain, and the USA). Regression analyses are used in order to test whether changes in cross-regional differences in growth patterns within each country can be attributed to changes in levels of regional autonomy. The results suggest that, contrary to the expectations of devolutionists, the degree of devolution is in most cases irrelevant for economic growth and, when it matters -- as in the cases of Mexico and the USA -- it is linked to lower rather than greater economic efficiency.

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Bibliographic Info

Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 36 (2004)
Issue (Month): 11 (November)
Pages: 1907-1928

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Handle: RePEc:pio:envira:v:36:y:2004:i:11:p:1907-1928

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Cited by:
  1. Díaz Serrano, Lluís & Rodríguez Pose, Andrés, 2011. "Decentralization, happiness and the perception of institutions," Working Papers, Universitat Rovira i Virgili, Department of Economics 2072/151812, Universitat Rovira i Virgili, Department of Economics.
  2. Diaz-Serrano, Luis & Rodríguez-Pose, Andrés, 2014. "Decentralization and the Welfare State: What Do Citizens Perceive?," MPRA Paper 54123, University Library of Munich, Germany.
  3. Roberto Ezcurra & Andrés Rodríguez-Pose, 2010. "Is Fiscal Decentralization Harmful for Economic Growth? Evidence from the OECD Countries," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0051, Spatial Economics Research Centre, LSE.
  4. Andrés Rodríguez-Pose & Anne Krøijer, 2009. "Fiscal Decentralization and Economic Growth in Central and Eastern Europe," Growth and Change, Gatton College of Business and Economics, University of Kentucky, Gatton College of Business and Economics, University of Kentucky, vol. 40(3), pages 387-417.
  5. Serhan Cevik, 2011. "Policy Coordination in Fiscal Federalism," IMF Working Papers, International Monetary Fund 11/147, International Monetary Fund.
  6. Ehtisham Ahmad & Giorgio Brosio & Vito Tanzi, 2008. "Local Service Provision in Selected Oecd Countries," IMF Working Papers, International Monetary Fund 08/67, International Monetary Fund.
  7. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2012. "Decentralization, Subjective Well-Being And The Perception Of Institutions," ERSA conference papers ersa12p586, European Regional Science Association.
  8. Anwar Shah & Theresa Thompson & Heng-fu Zou, 2004. "Decentralising the public sector: The Impact of Decentralisation on Service Delivery, Corruption, Fiscal Management and Growth in Developing and Emerging Market Economies: A Synthesis of Empirical Evi," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 492, China Economics and Management Academy, Central University of Finance and Economics.
  9. Ehtisham Ahmad & Giorgio Brosio, 2009. "Decentralization and local service provision: what do we know?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 38347, London School of Economics and Political Science, LSE Library.
  10. Massimo Del Gatto, 2004. "Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution," Working Papers, Fondazione Eni Enrico Mattei 2004.93, Fondazione Eni Enrico Mattei.
  11. K. L. Devkota, 2014. "Impact of Fiscal Decentralization on Economic Growth in the Districts of Nepal," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper1420, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  12. Brosio, Giorgio & Zanola, Roberto, 2008. "The welfare costs of national standards: a contribution to the debate on the outcomes of de/centralization," POLIS Working Papers, Institute of Public Policy and Public Choice - POLIS 113, Institute of Public Policy and Public Choice - POLIS.
  13. Horváth, Gyula & Lóránd, Balázs, 2012. "Decentralizáció és gazdasági fejlődés. Az olasz példa
    [Decentralization and economic development. The case of Italy]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1273-1298.

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