Does decentralization improve the efficiency in the allocation of public investment? Evidence from Spain

Alejandro Esteller () and Albert Solé ()
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Alejandro Esteller: Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)
Albert Solé: Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB)

No 2005/5, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: The well-known "Decentralization Theorem" (Oates, 1972) establishes the superiority of decentralized public provision over the centralized case, which is not so sensitive to the diversity of expenditure needs among territories. We test this hypothesis using a unique Spanish database that provides information on road and educational infrastructure investment and capital stocks by region both before and after the decentralization of such responsibilities. We find that investment in both categories is much more sensitive to regional output and to infrastructure users and costs when sub-central governments have the responsibility over such services.

Keywords: Decentralization; Growth; Human capital; Roads (search for similar items in EconPapers)
JEL-codes: D72 H54 H72 H77 I20 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2005
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2005-5

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