Does decentralization improve the efficiency in the allocation of public investment? Evidence from Spain
AbstractThe 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 InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2005/5.
Length: 45 pages
Date of creation: 2005
Date of revision:
Decentralization; Growth; Human capital; Roads;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- I20 - Health, Education, and Welfare - - Education - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-13 (All new papers)
- NEP-EFF-2007-07-13 (Efficiency & Productivity)
- NEP-PBE-2007-07-13 (Public Economics)
- NEP-POL-2007-07-13 (Positive Political Economics)
- NEP-URE-2007-07-13 (Urban & Real Estate Economics)
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