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Decentralizing Development: Evidence from Government Splits

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  • Dahis, Ricardo
  • Szerman, Christiane

Abstract

Changes in political boundaries aimed at devolving power to local governments are common in many countries. We examine the economic consequences of redistricting through the creation of smaller government units. Exploiting reforms that led to sharp variations in the number of government units in Brazil, we show that voluntary redistricting increases the size of the public sector, public services delivery, and economic activity in new local governments over the long term. The gains in economic activity are not offset by losses elsewhere and are stronger in peripheral and remote backward areas neglected by their parent governments. We provide evidence that decentralizing decision-making power boosts local development in disadvantaged areas beyond simply gains in fiscal revenues.

Suggested Citation

  • Dahis, Ricardo & Szerman, Christiane, 2024. "Decentralizing Development: Evidence from Government Splits," Research Department working papers 2297, CAF Development Bank Of Latinamerica.
    • Handle: RePEc:dbl:dblwop:2297
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    Cited by:

    1. Hémet, Camille & Wren-Lewis, Liam & Mahoney, Jessica, 2023. "Decentralization, Ethnic Fractionalization, and Public Services: Evidence from Kenyan Healthcare," CEPR Discussion Papers 18059, C.E.P.R. Discussion Papers.
    2. repec:osf:socarx:em3js_v1 is not listed on IDEAS
    3. Balia, S.; & Brau, R.; & Pau, S.;, 2025. "One plus one makes less than two? Consolidation policies and mortality in the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 25/02, HEDG, c/o Department of Economics, University of York.
    4. Augusto Cerqua & Costanza Giannantoni & Federico Zampollo & Matteo Mazziotta, 2025. "The Municipal Administration Quality Index: The Italian Case," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 177(1), pages 345-378, March.

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    Keywords

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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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