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Government decentralization as a commitment in non-democracies

Mark Gradstein

Journal of Comparative Economics, 2017, vol. 45, issue 1, 110-118

Abstract: In the past several decades, many countries, among them non-democratic, chose to decentralize their governments. One prominent and well researched example is China's decentralization in 1980–1990s. This paper proposes a rationale to account for a voluntary devolution of centralized power by a non-democratic ruler through decentralization. The idea is that decentralization serves as a commitment device to ensure that ex post chosen policies reflect regional preferences, thereby boosting individual productive effort incentives, hence tax revenues used to provide national public goods. Thus, it helps to overcome the holdup problem, enhancing efficiency and possibly benefitting the non-democratic ruler.

Keywords: Federalism; Regional decentralization; Non-democracies (search for similar items in EconPapers)
JEL-codes: H7 (search for similar items in EconPapers)
Date: 2017
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