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Decentralization and the provision of public services : framework and implementation

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  • Kim, Aehyung
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    Abstract

    This paper discusses decentralization (administrative, fiscal and political) of government in public service provision. It aims to facilitate understanding among practitioners, policy makers, and scholars about what decentralization entails in practice compared to theory. A review of the empirical literature and experience of decentralization is presented. The paper highlights issues that policy makers in developing and transitional countries should be aware of when reforming government, considering their unique political and economic environment. The author argues that decentralization produces efficiency gains stemming from inter-jurisdictional competition, enhanced checks and balances over the government through voting at the subnational level, and informational advantages due to proximity to citizens. By contrast, arguments against decentralization includethe risk of an increased level of corruption, coordination problems stemming from multiple layers of government, low capacity of subnational government, and unproductive inter-jurisdictional competition. Decentralization itself does not render increased government effectiveness in public service provision. Instead, the effectiveness of government largely depends on the quality of human capital and institutions.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4503.

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    Date of creation: 01 Feb 2008
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    Handle: RePEc:wbk:wbrwps:4503

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    Related research

    Keywords: Banks&Banking Reform; Public Sector Economics&Finance; Intergovernmental Fiscal Relations and Local Finance Management; Debt Markets; Economic Theory&Research;

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    1. Dilip Mookherjee & Pranab Bardhan, 2005. "Decentralization, Corruption And Government Accountability: An Overview," Boston University - Department of Economics - Working Papers Series WP2005-023, Boston University - Department of Economics, revised Jun 2005.
    2. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications, The World Bank, number 7171.
    3. Mariano Tommasi, 2002. "Federalism in Argentina and the Reforms of the 1990s," Working Papers 48, Universidad de San Andres, Departamento de Economia, revised May 2002.
    4. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, information and incentives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 567-585.
    5. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
    6. Roy Bahl & Jorge Martinez-Vazquez, 2013. "Sequencing Fiscal Decentralization," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 641-687, November.
    7. Cremer, Jaques & Estache, Antonio & Seabright, Paul & DEC, 1994. "The decentralization of public services : lessons from the theory of the firm," Policy Research Working Paper Series 1345, The World Bank.
    8. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 64, pages 416.
    9. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper9803, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    10. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers and Journal Articles 03-91, W.E. Upjohn Institute for Employment Research.
    11. Jonathan Rodden, 2000. "Decentralization and the Challenge of Hard Budget Constraints," World Bank Other Operational Studies 11426, The World Bank.
    12. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    13. Boadway, Robin & Roberts, Sandra & Shah, Anwar, 1994. "The reform of fiscal systems in developing and emerging market economies : a federalism perspective," Policy Research Working Paper Series 1259, The World Bank.
    14. Olson, Mancur, Jr, 1969. "The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government," American Economic Review, American Economic Association, vol. 59(2), pages 479-87, May.
    15. repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
    16. Alan H. Peters & Peter S. Fisher, 2002. "State Enterprise Zone Programs: Have They Worked?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, W.E. Upjohn Institute for Employment Research, number sezp.
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