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Does decentralization improve the efficiency in the allocation of public investment? Evidence from Spain

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Author Info

  • Alejandro Esteller

    ()
    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

  • Albert Solé

    ()
    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

Abstract

The well-known "Decentralization Theorem" (Oates, 1972) establishes the superiority of decentralized public provision over the centralized case, which is not so sensitive to the diversity of expenditure needs among territories. We test this hypothesis using a unique Spanish database that provides information on road and educational infrastructure investment and capital stocks by region both before and after the decentralization of such responsibilities. We find that investment in both categories is much more sensitive to regional output and to infrastructure users and costs when sub-central governments have the responsibility over such services.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2005/5.

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Length: 45 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:ieb:wpaper:357450art73

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Keywords: Decentralization; Growth; Human capital; Roads;

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References

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Cited by:
  1. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.

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