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Regional Decentralization in Spain: a Way to Increase Dynamics of Economic Growth

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  • Piecuch, Jakub

Abstract

Paper will present the impact of Spanish devolution process on the regional economic situation. Decentralization of power from central to regional and local government since the ratification of the Constitution in 1978, is one of the most important factors of Spanish success. The shape of Spain is determined by actions heading towards prevention of the country’s disintegration into different political structures. This course of action was successful and it allowed Spain to connect democratic developments with devolution of responsibilities and fiscal measures. Because of historical factors, an asymmetry in power decentralization can be observed. Some regions, specifically those with more practice in self-governing, obtained immediately a high level of responsibilities, while others, gradually increased them for the last twenty years. However all Autonomous Communities have nowadays much the same competencies. Another situation can be observed in fiscal autonomy field. The Basque Country and Navarre function under special agreements with the central government, which grants them a nearly exclusive fiscal autonomy. The remaining fifteen regions have been dependent on central government grants and ceded taxes for years, with a low level of fiscal autonomy. As a result, economic indicators in the Basque Country and Navarre reached much higher levels than in other parts of Spain. Also the situation in the labor market is much better in the two regions. Anyway the decentralization process speeded up the acquisition of governing skills and helped to improve methods of spending European structural funds. This is so important because European means obtained by Spain within the framework of structural funds and Cohesion Fund have played the role of the most significant instrument to determine economic development of Spain and particular regions. The European aid resulted in raised economic development rate, increased investment in infrastructure and caused considerable unemployment reduction.

Suggested Citation

  • Piecuch, Jakub, 2006. "Regional Decentralization in Spain: a Way to Increase Dynamics of Economic Growth," MPRA Paper 72259, University Library of Munich, Germany, revised 2006.
    • Handle: RePEc:pra:mprapa:72259
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    References listed on IDEAS

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    Cited by:

    1. Piecuch, Jakub, 2007. "Two decades in the European Union - economic success of Spanish regions," MPRA Paper 70665, University Library of Munich, Germany, revised 2007.
    2. Piecuch, Jakub, 2009. "Influence of European integration process on social and economic performance in Iberian Peninsula," MPRA Paper 72263, University Library of Munich, Germany, revised 2009.

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    JEL classification:

    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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