Decentralizing Development: Evidence from Government Splits

79 Pages Posted: 18 Feb 2018 Last revised: 12 Sep 2023

See all articles by Ricardo Dahis

Ricardo Dahis

Monash University; Data Basis

Christiane Szerman

London School of Economics

Date Written: May 20, 2021

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: redistricting, decentralization, political boundaries, development, state capacity

JEL Classification: O12

Suggested Citation

Dahis, Ricardo and Szerman, Christiane, Decentralizing Development: Evidence from Government Splits (May 20, 2021). Available at SSRN: https://ssrn.com/abstract=3125757 or http://dx.doi.org/10.2139/ssrn.3125757

Ricardo Dahis (Contact Author)

Monash University ( email )

Wellington Road
Clayton, Victoria 3
Australia

Data Basis ( email )

Rio de Janeiro
Brazil

Christiane Szerman

London School of Economics

Economics Department
32 Lincoln's Inn Fields
London, London WC2A 3PH
United Kingdom

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