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Government decentralization as a commitment in non-democracies

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  • Gradstein, Mark

Abstract

In the past several decades, many countries, among them non-democratic, chose to decentralize their governments. One prominent and well researched example is China's decentralization in 1980–1990s. This paper proposes a rationale to account for a voluntary devolution of centralized power by a non-democratic ruler through decentralization. The idea is that decentralization serves as a commitment device to ensure that ex post chosen policies reflect regional preferences, thereby boosting individual productive effort incentives, hence tax revenues used to provide national public goods. Thus, it helps to overcome the holdup problem, enhancing efficiency and possibly benefitting the non-democratic ruler.

Suggested Citation

  • Gradstein, Mark, 2017. "Government decentralization as a commitment in non-democracies," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 110-118.
  • Handle: RePEc:eee:jcecon:v:45:y:2017:i:1:p:110-118
    DOI: 10.1016/j.jce.2016.01.005
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    More about this item

    Keywords

    Federalism; Regional decentralization; Non-democracies;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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