Decentralization and Political Institutions

Ruben Enikolopov and Ekaterina Zhuravskaya

No 45, Economics Working Papers from Institute for Advanced Study, School of Social Science

Abstract: Does fiscal decentralization lead to more efficient governance, better public goods, and higher economic growth? This paper tests hypotheses of the theoretical literature that results of decentralization depend on features of political institutions. Using data from up to 95 countries for 25 years we show that the effect of fiscal decentralization strongly depends on two aspects of political centralization: 1) strength of national party system (measured by the age of main parties and fractionalization of government parties) and 2) subordination (whether local and state executives are appointed or elected). We find solid support for Riker’s theory (1964): in developing countries, strong parties significantly improve the results of fiscal decentralization for economic growth, quality of government, and public goods provision. There is also some evidence from developing countries that administrative subordination of local to higher-level authorities improves decentralization results.

Keywords: Decentralization; Political Institutions; Riker's Theory (search for similar items in EconPapers)
Pages: 49 pages
Date: 2004-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Decentralization and political institutions (2007)
Working Paper: Decentralization and Political Institutions (2006)
Working Paper: Decentralization and Political Institutions (2006)
Working Paper: Decentralization and Political Institutions (2003)
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