This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Decentralization and Political Institutions

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Enikolopov, Ruben
Zhuravskaya, Ekaterina

Additional information is available for the following registered author(s):

Abstract

Does fiscal decentralization result in more efficient governance and higher economic growth? This Paper empirically tests the hypothesis posed by theoretical literature that the effect of economic decentralization depends on features of the political institutions. Using data from 95 countries for the last 25 years, we show that the effect of decentralization on economic growth, quality of government, and public goods provision strongly depends on the following two aspects of political centralization: 1) weakness/strength of the party system (measured by fractionalization of parliament and age of main parties); and 2) subordination (whether local- and province-level executives are appointed or elected). We find solid support for Riker’s theory (1964). Strong parties in developing and transition countries significantly improve the results of fiscal decentralization for economic growth, quality of government, and public goods provision. In addition, subordination of local authorities to higher-level governments improves the effect of decentralization on growth and government quality, while its effect on public goods provision depends on particular type of public good considered.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cepr.org/pubs/dps/DP3857.asp
File Format: application/pdf
File Function:
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3857.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:cpr:ceprdp:3857

Contact details of provider:
Postal: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords: decentralization; growth; parties; political institutions; quality of government;

Other versions of this item:

Find related papers by JEL classification:
H10 - Public Economics - - Structure and Scope of Government - - - General
H40 - Public Economics - - Publicly Provided Goods - - - General
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  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.
    Other versions:
  2. Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Zhuravskaya, Ekaterina V., 2000. "Incentives to provide local public goods: fiscal federalism, Russian style," Journal of Public Economics, Elsevier, vol. 76(3), pages 337-368, June. [Downloadable!] (restricted)
    Other versions:
  4. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July. [Downloadable!] (restricted)
  5. Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1121-1161, December. [Downloadable!] (restricted)
    Other versions:
  7. Alberto Alesina & Guido Tabellini, 2003. "Bureaucrats or Politicians?," Working Papers 238, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  8. Robalino, David A. & Picazo, Oscar F. & Voetberg, Albertus, 2001. "Does fiscal decentralization improve health outcomes? - evidence from a cross-country analysis," Policy Research Working Paper Series 2565, The World Bank. [Downloadable!]
  9. Xie, Danyang & Zou, Heng-fu & Davoodi, Hamid, 1999. "Fiscal Decentralization and Economic Growth in the United States," Journal of Urban Economics, Elsevier, vol. 45(2), pages 228-239, March. [Downloadable!] (restricted)
  10. Alesina, Alberto, et al, 2003. " Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-94, June. [Downloadable!] (restricted)
    Other versions:
  11. Hehui Jin & Yingyi Qian & Barry Weingast, 1999. "Regional Decentralization and Fiscal Incentives: Federalism, Chinese Style," Working Papers 99013, Stanford University, Department of Economics. [Downloadable!]
  12. Winkler, Donald R. & Rounds, Taryn, 1996. "Municipal and private sector response to decentralization and school choice," Economics of Education Review, Elsevier, vol. 15(4), pages 365-376, October. [Downloadable!] (restricted)
  13. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October. [Downloadable!] (restricted)
  14. Timothy Besley & Stephen Coate, 2003. "Elected Versus Appointed Regulators: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1176-1206, 09. [Downloadable!] (restricted)
    Other versions:
  15. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall. [Downloadable!] (restricted)
  16. Allen Hicken, 2004. "The Politics of Economic Reform in Thailand: Crisis and Compromise," William Davidson Institute Working Papers Series 2004-638, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  17. Daron Acemoglu, 2005. "Constitutions, Politics, and Economics: A Review Essay on Persson and Tabellini's The Economic Effects of Constitutions," Journal of Economic Literature, American Economic Association, vol. 43(4), pages 1025-1048, December. [Downloadable!] (restricted)
    Other versions:
  18. Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," NBER Working Papers 9006, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  19. Olivier Blanchard & Andrei Shleifer, 2000. "Federalism With and Without Political Centralization. China versus Russia," Harvard Institute of Economic Research Working Papers 1889, Harvard - Institute of Economic Research.
    Other versions:
  20. 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)
    Other versions:
  21. Pranab K. Bardhan & Dilip Mookherjee, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May. [Downloadable!] (restricted)
  22. Cai, Hongbin & Treisman, Daniel, 2004. "State corroding federalism," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 819-843, March. [Downloadable!] (restricted)
  23. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926.
  24. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank. [Downloadable!]
  25. Musgrave, Richard A, 1969. "Theories of Fiscal Federalism," Public Finance = Finances publiques, , vol. 24(4), pages 521-36.
  26. Timothy Besley & Anne Case, 1993. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," NBER Working Papers 4575, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  27. Maskin, Eric & Qian, Yingyi & Xu, Chenggang, 2000. "Incentives, Information, and Organizational Form," Review of Economic Studies, Blackwell Publishing, vol. 67(2), pages 359-78, April.
    Other versions:
  28. Nicola Gennaioli & Ilia Rainer, 2007. "The modern impact of precolonial centralization in Africa," Journal of Economic Growth, Springer, vol. 12(3), pages 185-234, September. [Downloadable!] (restricted)
  29. Pablo T. Spiller, 2003. "The Institutional Foundations of Public Policy: A Transactions Approach with Application to Argentina," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(2), pages 281-306, October.
    Other versions:
  30. Ron Shachar, 2003. "Party loyalty as habit formation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 251-269. [Downloadable!]
  31. Torsten Persson & Guido Tabellini & Francesco Trebbi, 2003. "Electoral Rules and Corruption," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 958-989, 06. [Downloadable!] (restricted)
    Other versions:
  32. Qian, Yingyi & Roland, Gerard, 1998. "Federalism and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 88(5), pages 1143-62, December. [Downloadable!] (restricted)
    Other versions:
  33. Davoodi, Hamid & Zou, Heng-fu, 1998. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," Journal of Urban Economics, Elsevier, vol. 43(2), pages 244-257, March. [Downloadable!] (restricted)
  34. Parry, Taryn Rounds, 1997. "Achieving balance in decentralization: A case study of education decentralization in Chile," World Development, Elsevier, vol. 25(2), pages 211-225, February. [Downloadable!] (restricted)
  35. Alberto Alesina, 2002. "The Size of Countries: Does it Matter?," Harvard Institute of Economic Research Working Papers 1975, Harvard - Institute of Economic Research. [Downloadable!]
  36. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
    Other versions:
  37. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July. [Downloadable!] (restricted)
  38. Yasheng Huang, 2002. "Managing Chinese Bureaucrats: An Institutional Economics Perspective," Political Studies, Political Studies Association, vol. 50(1), pages 61-79, 03. [Downloadable!] (restricted)
  39. Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, vol. 67(2), pages 221-240, February. [Downloadable!] (restricted)
    Other versions:
  40. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-83, May. [Downloadable!] (restricted)
  41. Mariano Tommasi & Sebastián M. Saiegh & Pablo Sanguinetti, 2001. "Fiscal Federalism in Argentina: Policies, Politics, and Institutional Reform," Working Papers 32, Universidad de San Andres, Departamento de Economia, revised May 2001.
  42. Sonin, Konstantin, 2003. "Provincial Protectionism," CEPR Discussion Papers 3973, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  43. Matias Barenstein & Luiz de Mello, 2001. "Fiscal Decentralization and Governance: A Cross-Country Analysis," IMF Working Papers 01/71, International Monetary Fund. [Downloadable!]
  44. Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1719-1742, September. [Downloadable!] (restricted)
  45. Koleman S. Strumpf & Felix Oberholzer-Gee, 2002. "Endogenous Policy Decentralization: Testing the Central Tenet of Economic Federalism," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 1-36, February. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stefan Voigt & Lorenz Blume, 2009. "The Economic Effects of Federalism and Decentralization – A Cross-Country Assessment," MAGKS Papers on Economics 200905, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
    Other versions:
  2. Bert Hofmann & Kai Kaiser & Günther G. Schulze, 2004. "Dezentralisierung und Korruption: erste Erfahrungen aus Indonesien," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(2), pages 226-246.
  3. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2004. "Federalism, Decentralization, and Economic Growth," Marburg Working Papers on Economics 200430, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  4. Lars P. Feld & Gebhard Kirchgässner & Christoph A. Schaltegger, 2004. "Fiscal Federalism and Economic Performance: Evidence from Swiss Cantons," Marburg Working Papers on Economics 200420, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  5. Christian Lessmann & Gunther Markwardt, 2009. "Aid, Growth and Devolution," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. 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," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(1), pages 10-14, October. [Downloadable!]
  7. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2003. "Föderalismus, Dezentralität und Wirtschaftswachstum," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 361-377.
  8. Guriev, Sergei & Yakovlev, Evgeny & Zhuravskaya, Ekaterina, 2008. "Interest Group Politics in a Federation," CEPR Discussion Papers 6671, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Antonis Adam & Manthos D. Delis & Pantelis Kammas, 2008. "Fiscal Decentralization and Public Sector Efficiency: Evidence from OECD Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. Evgeny Yakovlev & Ekaterina Zhuravskaya & Sergei Guriev, 2007. "Inter-State Spillovers and Lobbying," Working Papers WP13_2007_16, Laboratory for Macroeconomic Analysis. [Downloadable!]
  11. Schakel , Arjan H., 2008. "Validation of the Regional Authority Index," MPRA Paper 8972, University Library of Munich, Germany. [Downloadable!]
  12. Andreas Kyriacou & Oriol Roca sagalés, 2009. "Fiscal descentralization and the quality of government: evidence from panel data," Hacienda Pública Española, IEF, vol. 189(2), pages 131-155, June. [Downloadable!]
  13. Timothy Besley & Rohini Pande & Vijayendra Rao, 2007. "Just Rewards?Local Politics and Public ResourceAllocation in South India," STICERD - Development Economics Papers 49, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  14. Robert P. Inman, 2008. "Federalism's Values and the Value of Federalism," NBER Working Papers 13735, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Statistics
Access and download statistics

Did you know? IDEAS was sponsored from 1997 to 2002 by the Université du Québec à Montréal.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.