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One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats

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Listed author(s):
  • Christian Lessmann
  • Gunther Markwardt

Abstract

The majority of theoretical and empirical studies on the relationship between decentralization and corruption argues that the devolution of power might be a feasible instrument to keep corruption at bay. We argue that this result crucially depends on the effectiveness of monitoring bureaucrat’s behavior. The benefits of interjurisdictional competition only occur if there is a supervisory body such as a free press, which is often lacking in less-developed countries. Using cross-country data, we analyze the relationship between decentralization and corruption taking different degrees of the freedom of the press into account. Our main finding is that decentralization counteracts corruption in countries with high degrees of press freedom, whereas countries without effective monitoring suffer from decentralization. Our policy implication is that a free press is a necessary pre-condition for successful decentralization programs.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2662.

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Date of creation: 2009
Handle: RePEc:ces:ceswps:_2662
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Keywords: decentralization; corruption; freedom of press;

Other versions of this item:

Find related papers by JEL classification:
  • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
  • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
  • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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