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Decentralization and growth:has the cross-country approach met a dead end?


  • Pierre Salmon

    () (Université de Bourgogne)


The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across countries. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-country relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across countries, however, does not entail the absence of relations specific to each country. That possibility justifies exploring a second approach. When country specificity is very strong, and in spite of some recent empirical work on single-country data, it is normally difficult to say, for any given country, if there is a relation between its observable decentralization arrangements and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Some episodes, related to the way the people and governments respond to persistent economic underperformance, and the way decentralization arrangements then change, may allow a presumption that, in these cases, the relation exists. That presumption is to be verified by case studies.

Suggested Citation

  • Pierre Salmon, 2012. "Decentralization and growth:has the cross-country approach met a dead end?," Working Papers CREGO 1120604, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
  • Handle: RePEc:dij:wpfarg:1120604

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    References listed on IDEAS

    1. De Long, J Bradford & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1990. "Noise Trader Risk in Financial Markets," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 703-738, August.
    2. De Bondt, Werner P. M., 1993. "Betting on trends: Intuitive forecasts of financial risk and return," International Journal of Forecasting, Elsevier, vol. 9(3), pages 355-371, November.
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    Cited by:

    1. Richard M. Bird, 2014. "Foreign advice and tax policy in developing countries," Chapters,in: Taxation and Development: The Weakest Link?, chapter 4, pages 103-144 Edward Elgar Publishing.

    More about this item


    decentralization; economic growth; public choice; economic systems; reforms.;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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