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The relationship between decentralization and economic growth across regimes

Author

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  • Henry Aray

    (University of Granada)

  • Luis Pedauga

    (University of Leon)

Abstract

Panel smooth transition regression (PSTR) is applied to obtain thresholds in certain variables to classify the regions into regimes (high or low). Data for the regions of Spain over the period 1986–2010 are used. In general, the results point to a positive (negative) relationship between fiscal (administrative) decentralization and economic growth in regions with low public infrastructure stock per efficient worker and high human capital per worker. In addition, in regions with low (high) total factor productivity, expenditure (revenue) decentralization is positively (negatively) correlated with economic growth. The results are fairly robust to different specifications and estimation methods.

Suggested Citation

  • Henry Aray & Luis Pedauga, 2024. "The relationship between decentralization and economic growth across regimes," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(1), pages 1-25, January.
    • Handle: RePEc:spr:anresc:v:72:y:2024:i:1:d:10.1007_s00168-022-01187-x
    DOI: 10.1007/s00168-022-01187-x
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    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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