Decentralization and Corruption: Evidence Across Countries
18 Pages Posted: 20 Apr 2016
Date Written: February 2000
Abstract
Empirical estimates suggest that fiscal decentralization in government spending is associated with lower government corruption.
The relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design. The theoretical literature makes ambiguous predictions about this relationship, and it has remained virtually unexamined by empiricists.
Fisman and Gatti make a first attempt at examining the issue empirically, by looking at the cross-country relationship between fiscal decentralization and corruption as measured by a number of different indices.
Their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption.
Moreover, they find that the origin of a country's legal system - for example, civil versus common legal code - performs extremely well as an instrument for decentralization. The estimated relationship between decentralization, when so instrumented, and corruption is even stronger.
The evidence suggests a number of interesting areas for future work, including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction, and understanding the channels through which decentralization succeeds in keeping corruption in check.
This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to study the determinants of corruption. The authors may be contacted at rf250@columbia.edu or rgatti@worldbank.org.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Corruption and the Rate of Temptation: Do Low Wages in the Civil Service Cause Corruption?
-
Does Decentralization Increase Responsiveness to Local Needs? Evidence from Bolivia
-
Applying a Simple Measure of Good Governance to the Debate on Fiscal Decentralization
By Anwar Shah and Jeffrey Huther
-
An International Statistical Survey of Government Employment and Wages
By Salvatore Schiavo-campo, Giulio De Tommaso, ...
-
Does Decentralization Increase Government Responsiveness to Local Needs? Evidence from Bolivia
-
Distributive Politics and the Benefits of Decentralisation
By Ben Lockwood
-
Fiscal Decentralization and Governance: A Cross-Country Analysis
-
Fiscal Federalism and Macroeconomic Governance: For Better or for Worse?
By Anwar Shah
-
Balance, Accountability, and Responsiveness: Lessons About Decentralization
By Anwar Shah