Does Decentralization Matter for Regional Disparities? A Cross-Country Analysis
AbstractThis paper looks at the relationship between fiscal and political decentralization and theevolution of regional inequalities in a panel of 26 countries - 19 developed and 7 developing- for the period between 1990 and 2006. Using an instrumental variables method, it finds thatwhereas for the whole sample decentralization is completely dissociated for the evolution ofregional disparities, the results are highly contingent on the level of development, the existinglevel of territorial inequalities, and the fiscal redistributive capacity of the countries in thesample. Decentralization in high income countries has, if anything, been associated with areduction of regional inequality. In low and medium income countries, fiscal decentralizationhas been associated with a significant rise in regional disparities, which the positive effects ofpolitical decentralization have been unable to compensate. Policy preferences by subnationalgovernments for expenditure in economic affairs, education, and social protection havecontributed to this trend.
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Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0025.
Date of creation: Jul 2009
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
Fiscal decentralization; political decentralization; regional disparities; territorial inequality; fiscal redistribution;
Other versions of this item:
- Andrés Rodríguez-Pose & Roberto Ezcurra, 2010. "Does decentralization matter for regional disparities? A cross-country analysis," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 619-644, September.
- Roberto Ezcurra & Andrés Rodríguez-Pose, 2009. "Does decentralization matter for regional disparities? A cross-country analysis," LSE Research Online Documents on Economics 33244, London School of Economics and Political Science, LSE Library.
- Andrés Rodríguez-Pose & Roberto Ezcurra, 2009. "Does decentralization matter for regional disparities? A cross-country analysis," Working Papers 2009-04, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-16 (All new papers)
- NEP-GEO-2009-08-16 (Economic Geography)
- NEP-PBE-2009-08-16 (Public Economics)
- NEP-POL-2009-08-16 (Positive Political Economics)
- NEP-URE-2009-08-16 (Urban & Real Estate Economics)
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