Decentralizing Development: Evidence from Government Splits

Ricardo Dahis and Christiane Szerman ()
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Christiane Szerman: Department of Economics, University College London

No 2023-18, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Changes in political boundaries aimed at devolving power to local governments are common in many countries. We examine the economic consequences of redistricting through the creation of smaller government units. Exploiting reforms that led to sharp variations in the number of government units in Brazil, we show that voluntary redistricting increases the size of the public sector, public services delivery, and economic activity in new local governments over the long-term. These benefits are not offset by losses elsewhere and are stronger in peripheral and remote backward areas that are neglected by their parent governments. We provide evidence that the decentralization of decision-making power boosts local development in disadvantaged areas beyond simply gains in fiscal revenues.

Keywords: Decentralizing; Development (search for similar items in EconPapers)
JEL-codes: Q23 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-ure
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Related works:
Working Paper: Decentralizing Development: Evidence from Government Splits (2024)
Working Paper: Decentralizing Development: Evidence from Government Splits (2024)
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