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Decentralization of the Size and Scope of Local Governments and Corruption

  • Rajeev K. Goel
  • Michael A. Nelson

This research adds to the literature on the nexus between government and corruption by examining further the influence of government decentralization on corruption. Previous research has focused primarily on fiscal decentralization. We bring additional evidence to bear for the United States by addressing whether the structure of local governments – measured both in terms of the scope of services offered and the size of the population served – has a bearing on corruption within the state. Results show that government decentralization does not necessarily reduce corruption – the type of decentralization matters. Specifically, we find that more general-purpose governments consistently contribute to corruption. In contrast, the effect of special-purpose governments on corruption is mixed. The findings uniquely flush out the tension between fiscal decentralization and fragmental local government structures in terms of impacts on corruption. Beyond this, we find that the influences of various government enforcement agencies on corruption, including police, judiciary and corrections, vary. Other corruption determinants generally support the literature. Policy implications are discussed.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-031.

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Length: 35 p.
Date of creation: May 2010
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/57625
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  1. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
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  3. Fisman, Raymond & Gatti, Roberta, 2002. " Decentralization and Corruption: Evidence from U.S. Federal Transfer Programs," Public Choice, Springer, vol. 113(1-2), pages 25-35, October.
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  8. Goel, Rajeev K. & Nelson, Michael A., 2008. "Causes of Corruption:History, Geography, and Government," BOFIT Discussion Papers 6/2008, Bank of Finland, Institute for Economies in Transition.
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  12. Goel, Rajeev K & Nelson, Michael A, 1998. " Corruption and Government Size: A Disaggregated Analysis," Public Choice, Springer, vol. 97(1-2), pages 107-20, October.
  13. Rafael La Porta & Florencio Lopez-de-Silanes & Cristian Pop-Eleches & Andrei Shleifer, 2004. "Judicial Checks and Balances," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 445-470, April.
  14. Mikael Priks, 2007. "Judiciaries in Corrupt Societies," CESifo Working Paper Series 2008, CESifo Group Munich.
  15. Goel, Rajeev K. & Nelson, Michael A., 2007. "Are corrupt acts contagious?: Evidence from the United States," Journal of Policy Modeling, Elsevier, vol. 29(6), pages 839-850.
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