Political Decentralization

Posted: 7 Aug 2015

See all articles by Dilip Mookherjee

Dilip Mookherjee

Boston University - Department of Economics

Date Written: August 2015


I provide a critical overview of the literature on political decentralization. After reviewing first- and second-generation theories of federalism, I describe recent empirical studies focusing mainly on determinants of capture and local government accountability emphasized by second-generation theories. The article concludes by describing emerging new issues that deserve more attention in future research: a wider range of political distortions beyond capture and corruption; effects of decentralization on intercommunity allocations, learning, and experimentation, and on democracy itself; a comparison of decentralization with other organizational alternatives; and issues pertaining to design and implementation raised by first-generation federalism theories, such as interjurisdictional spillovers, vertical fiscal relations, the range of devolution, and the political economy of implementation.

Suggested Citation

Mookherjee, Dilip, Political Decentralization (August 2015). Annual Review of Economics, Vol. 7, pp. 231-249, 2015, Available at SSRN: https://ssrn.com/abstract=2640076 or http://dx.doi.org/10.1146/annurev-economics-080614-115527

Dilip Mookherjee (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-4392 (Phone)
617-353-4143 (Fax)

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