Does Fiscal Decentralization Dampen All Ethnic Conflicts? The heterogeneous Impact of Fiscal Decentralization on Local Minorities and Local Majorities
Fiscal decentralization is widely proposed as an efficient means to accommodate ethnic violence. Yet while most of the econometric cross-country studies supports this view, case studies offer mixed results. In this paper, it is argued that this is partly due to the fact that fiscal decentralization exerts a heterogeneous impact across ethnic local majorities and minorities, both types of groups being regionally concentrated. The main argument in favour of fiscal decentralization is that by politically and fiscally empowering the local communities, these are enabled to allocate public spending in a way that is closer to their preferences. This paper hypothesises that such an empowerment mechanism, while relevant for local majorities, is likely to perform poorly for local minorities as they are not in a dominant position locally. This might feed ethnic violence as local minorities mobilize to obtain administrative regions in which they would control the decentralized policy. Similarly, fiscal decentralization could fuel communal violence as politically marginalized ethnic minorities clash against powerful local majorities. The article also hypothesises that the concern expressed by sceptics that fiscal decentralization undermines national cohesion and encourages secessionism is more acute for local majorities than for local minorities as the latter are usually too small to credibly envisage independence. Such hypotheses are discussed in the paper and then empirically tested on a panel dataset of ethnic local majorities and minorities across the world on the period 1985-2001. The main results are that i) fiscal decentralization does not encourage secessionism but on the contrary dampen rebellion of local majorities but, ii) fiscal decentralization fuels rebellion of local minorities, iii) fiscal decentralization reduces communal violence for both local majorities and minorities. As a result of its heterogeneous impact, the article calls into question the relevance of relying on fiscal decentralization to manage ethnic violence.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alesina, Alberto & Devleeschauwer, Arnaud & Wacziarg, Romain & Kurlat, Sergio & Easterly, William, 2003.
4553003, Harvard University Department of Economics.
- Wacziarg, Romain & Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio, 2002. "Fractionalization," Research Papers 1744, Stanford University, Graduate School of Business.
- Alberto Alesina & Arnaud Devleeschauwer & William Easterly & Sergio Kurlat & Romain Wacziarg, 2003. "Fractionalization," NBER Working Papers 9411, National Bureau of Economic Research, Inc.
- Alberto Alesina & Arnaud Devleeschauwer & William Easterly & Sergio Kurlat & Romain Wacziarg, 2002. "Fractionalization," Harvard Institute of Economic Research Working Papers 1959, Harvard - Institute of Economic Research.
- Kjetil Bjorvatn & Alexander W. Cappelen, 2003. "Decentralization and the Fate of Minorities," CESifo Working Paper Series 1032, CESifo Group Munich.
- Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:22776. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.