Does Decentralization Matter for Regional Disparities? A Cross-Country Analysis

Roberto Ezcurra and Andrés Rodríguez-Pose

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper looks at the relationship between fiscal and political decentralization and theevolution of regional inequalities in a panel of 26 countries - 19 developed and 7 developing- for the period between 1990 and 2006. Using an instrumental variables method, it finds thatwhereas for the whole sample decentralization is completely dissociated for the evolution ofregional disparities, the results are highly contingent on the level of development, the existinglevel of territorial inequalities, and the fiscal redistributive capacity of the countries in thesample. Decentralization in high income countries has, if anything, been associated with areduction of regional inequality. In low and medium income countries, fiscal decentralizationhas been associated with a significant rise in regional disparities, which the positive effects ofpolitical decentralization have been unable to compensate. Policy preferences by subnationalgovernments for expenditure in economic affairs, education, and social protection havecontributed to this trend.

Keywords: Fiscal decentralization; political decentralization; regional disparities; territorial inequality; fiscal redistribution (search for similar items in EconPapers)
JEL-codes: H11 H71 R11 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-geo, nep-pbe, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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http://cep.lse.ac.uk/pubs/download/sercdp0025.pdf (application/pdf)

Related works:
Journal Article: Does decentralization matter for regional disparities? A cross-country analysis (2010)
Working Paper: Does decentralization matter for regional disparities? A cross-country analysis (2009)
Working Paper: Does decentralization matter for regional disparities? A cross-country analysis (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:sercdp:0025

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