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Rethinking the Political Economy of Decentralization: How Elections and Parties Shape the Provision of Local Public Goods

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Abstract

Decentralization is among the most important global trends of the new century, yet there is still no consensus on how to design political institutions to realize its benefits. In this paper, we investigate the political conditions under which decentralization will improve the delivery of public goods. We begin by incorporating insights from political science and economics into a rigorous and formal extension of the “decentralization theorem”. Our extension assumes inter-jurisdictional spillovers and suggests that the interaction of democratic decentralization (popularly elected sub-national governments) and party centralization (the power of national party leaders over subnational office-seekers) will produce the best outcomes for public service delivery. To test this argument empirically, we make use of a new dataset of sub-national political institutions created for this project. Our analyses, which allow us to examine educational outcomes in more than 125 countries across more than 25 years, provide support for our theoretical expectations.

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  • Raúl A. Ponce-Rodríguez & Charles R. Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2012. "Rethinking the Political Economy of Decentralization: How Elections and Parties Shape the Provision of Local Public Goods," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1227, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper1227
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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    3. Malesky, Edmund J. & Nguyen, Cuong Viet & Tran, Anh, 2014. "The Impact of Recentralization on Public Services: A Difference-in-Differences Analysis of the Abolition of Elected Councils in Vietnam," American Political Science Review, Cambridge University Press, vol. 108(01), pages 144-168, February.
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    5. Enikolopov, Ruben & Zhuravskaya, Ekaterina, 2007. "Decentralization and political institutions," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2261-2290, December.
    6. Raul A. Ponce-Rodriguez & Charles R. Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2017. "The Provision of Local Public Goods in Proportional Representation Electoral Systems with Closed and Open Party Lists," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1714, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    1. Estache, Antonio & Garsous, Grégoire & Seroa da Motta, Ronaldo, 2016. "Shared Mandates, Moral Hazard, and Political (Mis)alignment in a Decentralized Economy," World Development, Elsevier, vol. 83(C), pages 98-110.
    2. Jorge Martinez-Vazquez & Santiago Lago-Peñas & Agnese Sacchi, 2017. "The Impact Of Fiscal Decentralization: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1095-1129, September.
    3. Raúl A. Ponce-Rodríguez & Charles R. Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2016. "Political institutions and federalism: a “strong” decentralization theorem," Working Papers. Collection A: Public economics, governance and decentralization 1604, Universidade de Vigo, GEN - Governance and Economics research Network.
    4. Raul A. Ponce-Rodriguez & Charles R. Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2017. "The Provision of Local Public Goods in Proportional Representation Electoral Systems with Closed and Open Party Lists," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1714, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Estache, Antonio & Garsous, Grégoire & Seroa da Motta, Ronaldo, 2016. "Shared Mandates, Moral Hazard, and Political (Mis)alignment in a Decentralized Economy," World Development, Elsevier, vol. 83(C), pages 98-110.

    More about this item

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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