Decentralization and growth:has the cross-country approach met a dead end?

Pierre Salmon

Working Papers CREGO from Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations

Abstract: The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across countries. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-country relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across countries, however, does not entail the absence of relations specific to each country. That possibility justifies exploring a second approach. When country specificity is very strong, and in spite of some recent empirical work on single-country data, it is normally difficult to say, for any given country, if there is a relation between its observable decentralization arrangements and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Some episodes, related to the way the people and governments respond to persistent economic underperformance, and the way decentralization arrangements then change, may allow a presumption that, in these cases, the relation exists. That presumption is to be verified by case studies.

Keywords: decentralization; economic growth; public choice; economic systems; reforms. (search for similar items in EconPapers)
JEL-codes: D72 H70 O40 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-06
New Economics Papers: this item is included in nep-geo and nep-pbe
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Citations: View citations in EconPapers (1)

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