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

Ezcurra, Roberto and Rodríguez-Pose, Andrés (2010) Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries. SERC Discussion Papers, SERCDP0051. Spatial Economics Research Centre (SERC), London School of Economics and Political Science, London, UK.

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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 paper examines whether this is the case, by analysing the relationship between decentralization and economic growth in 21 OECD 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: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/SERC/publication...
Additional Information: © 2010 Roberto Ezcurra and Andrés Rodríguez-Pose
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
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: SERCDP0051
Date Deposited: 24 Mar 2011 11:22
URL: http://eprints.lse.ac.uk/33518/

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