Power to the People? The Impact of Decentralization on Governance
Swiss Institute for Business Cycle Research (KOF) Working Paper No. 121
35 Pages Posted: 8 Feb 2006
Date Written: January 2006
Abstract
The paper analyzes the impact of decentralization on governance employing four indicators of governance and five measures of decentralization. Depending on data availability, crosssections for a maximum of 129 countries are estimated. Results for a panel of about 70 countries over the period 1984-2001 are also presented. The results show that decentralization - measured as the share of sub-national employment, revenues or, respectively, expenditures - improves governance. This is particularly true for low income countries but - depending on the indicator employed - to some extent for high income countries also. However, the number of sub-national government tiers exerts a negative impact on some dimensions of governance.
Keywords: Decentralization, Governance, Legal Quality, Judicial Independence,
JEL Classification: H40, H71, H72, H77
Suggested Citation: Suggested Citation
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