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Decentralization in Developing Economies

Author

Listed:
  • Lucie Gadenne

    (Department of Economics, University College London, London WC1H 0AX, United Kingdom)

  • Monica Singhal

    (Harvard Kennedy School, Harvard University, Cambridge, Massachusetts 02138)

Abstract

Standard models of fiscal federalism suggest many benefits of decentralization in developing economies, and there has been a recent push toward decentralization around the world. However, developing countries presently still have less decentralization, particularly on the revenue side, than both developed countries today and the United States and Europe historically. We consider how the trade-offs associated with fiscal federalism apply in developing countries and discuss reasons for their relatively low levels of decentralization. We also consider additional features relevant to federalism in developing economies, such as the prevalence of nongovernmental organizations and the role of social incentives in policy design.

Suggested Citation

  • Lucie Gadenne & Monica Singhal, 2014. "Decentralization in Developing Economies," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 581-604, August.
    • Handle: RePEc:anr:reveco:v:6:y:2014:p:581-604
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080213-040833
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    Keywords

    fiscal federalism; public goods; taxation; transfers; corruption;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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