Decentralization in Africa and the Nature of Local Governments’ Competition: Evidence from Benin

Emilie Caldeira, Martial Foucault () and Grégoire Rota-Graziosi ()
Additional contact information
Emilie Caldeira: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Martial Foucault: CEVIPOF - Centre de recherches politiques de Sciences Po (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Grégoire Rota-Graziosi: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: Decentralization has been put forward as a powerful tool to reduce poverty and improve governance in Africa. This paper will study the existence and identify the nature of spillovers resulting from local expenditure policies. These spillovers impact the efficiency of decentralization. We develop a two-jurisdiction model of public expenditure, which differs from existing literature by capturing the extreme poverty of some local governments in developing countries through a generalized notion of Nash equilibrium, namely constrained Nash equilibrium. We show how and under what conditions spillovers among jurisdictions induce strategic behaviors from local officials. By estimating a spatial lag model for a panel data analysis of the 77 communes in Benin from 2002 to 2008, our empirical analysis establishes the existence of the strategic complementarity of public spending in various jurisdictions. Thus, any increase in the local public provision in one jurisdiction should induce a similar variation among the neighboring jurisdictions. This result raises the issue of coordination among local governments, and more broadly, it questions the efficiency of decentralization in developing countries in line with Oates' theorem.

Keywords: Local expenditures; Developing countries; Decentralization; Constrained Nash equilibrium; Strategic complementarity; Spatial econometrics (search for similar items in EconPapers)
Date: 2014-12
References: Add references at CitEc
Citations:

Published in International Tax and Public Finance, 2014, 22 (6), pp.1048-1076. ⟨10.1007/s10797-014-9343-y⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03571275

DOI: 10.1007/s10797-014-9343-y

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().