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Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries

Rodríguez-Pose, Andrés and Ezcurra, Roberto (2010) Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries. Journal of Economic Geography, 11 (4). pp. 619-643. ISSN 1468-2702

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Abstract

The global drive towards decentralization has been increasingly justified on the basis that greater transfers of resources to subnational governments are expected to deliver greater efficiency in the provision of public goods and services and greater economic growth. This article examines whether this is the case, by analysing the relationship between decentralization and economic growth in 21 Organization for Economic Co-operation and Development countries during the period between 1990 and 2005 and controlling not only for fiscal decentralization, but also for political and administrative decentralization. The results point towards a negative and significant association between fiscal decentralization and economic growth in the sample countries, a relationship which is robust to the inclusion of a series of control variables and to differences in expenditure preferences by subnational governments. The impact of political and administrative decentralization on economic growth is weaker and sensitive to the definition and measurement of political decentralization.

Item Type: Article
Official URL: http://joeg.oxfordjournals.org/
Additional Information: © 2011 The Authors
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Journal of Economic Literature Classification System: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
Sets: Departments > European Institute
Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: ISI:000291491200002
Date Deposited: 15 Dec 2010 14:38
URL: http://eprints.lse.ac.uk/30796/

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