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One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats

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Author Info
Christian Lessmann ()
Gunther Markwardt ()

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Abstract

The majority of theoretical and empirical studies on the relationship between decentralization and corruption argues that the devolution of power might be a feasible instrument to keep corruption at bay. We argue that this result crucially depends on the effectiveness of monitoring bureaucrat’s behavior. The benefits of interjurisdictional competition only occur if there is a supervisory body such as a free press, which is often lacking in less-developed countries. Using cross-country data, we analyze the relationship between decentralization and corruption taking different degrees of the freedom of the press into account. Our main finding is that decentralization counteracts corruption in countries with high degrees of press freedom, whereas countries without effective monitoring suffer from decentralization. Our policy implication is that a free press is a necessary pre-condition for successful decentralization programs.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2662.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2662

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Related research
Keywords: decentralization; corruption; freedom of press;

Other versions of this item:

Find related papers by JEL classification:
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

References listed on IDEAS
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  1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
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  2. Brunetti, Aymo & Weder, Beatrice, 2003. "A free press is bad news for corruption," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1801-1824, August. [Downloadable!] (restricted)
  3. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416. [Downloadable!] (restricted)
  4. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169. [Downloadable!] (restricted)
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  5. JOhn Bennett & Saul Estrin, 2006. "Corruption and Bureaucratic Structure in a Developing Economy," William Davidson Institute Working Papers Series 825, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  6. Chowdhury, Shyamal K., 2004. "The effect of democracy and press freedom on corruption: an empirical test," Economics Letters, Elsevier, vol. 85(1), pages 93-101, October. [Downloadable!] (restricted)
  7. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall. [Downloadable!] (restricted)
  8. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July. [Downloadable!] (restricted)
  9. Sebastian G. Kessing & Kai A. Konrad & Christos Kotsogiannis, 2007. "Foreign direct investment and the dark side of decentralization," Economic Policy, CEPR, CES, MSH, vol. 22, pages 5-70, 01. [Downloadable!] (restricted)
  10. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March. [Downloadable!] (restricted)
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