Decentralizing Development: Evidence from Government Splits

83 Pages Posted: 6 Feb 2024

See all articles by Ricardo Dahis

Ricardo Dahis

Monash University

Christiane Szerman

London School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2024

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. The gains in economic activity are not offset by losses elsewhere and are stronger in peripheral and remote backward areas neglected by their parent governments. We provide evidence that decentralizing decision-making power boosts local development in disadvantaged areas beyond simply gains in fiscal revenues.

Keywords: redistricting, decentralization, public goods, development

Suggested Citation

Dahis, Ricardo and Szerman, Christiane, Decentralizing Development: Evidence from Government Splits (2024). CESifo Working Paper No. 10927, Available at SSRN: https://ssrn.com/abstract=4717751 or http://dx.doi.org/10.2139/ssrn.4717751

Ricardo Dahis (Contact Author)

Monash University ( email )

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Wellington Road
Clayton, 3800
Australia

Christiane Szerman

London School of Economics

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

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