Is fiscal decentralization harmful for economic growth? Evidence from the OECD countries

2011

290 citations recorded by the source corpus.

The global drive towards decentralization has been increasingly justified on the basis that greater transfers of resources to subnational governments are expected to deliver greater efficiency in the provision of public goods and services and greater economic growth. This article examines whether this is the case, by analysing the relationship between decentralization and economic growth in 21 Organization for Economic Co-operation and Development countries during the period between 1990 and 2005 and controlling not only for fiscal decentralization, but also for political and administrative decentralization. The results point towards a negative and significant association between fiscal decentralization and economic growth in the sample countries, a relationship which is robust to the inclusion of a series of control variables and to differences in expenditure preferences by subnational governments. The impact of political and administrative decentralization on economic growth is weaker and sensitive to the definition and measurement of political decentralization.

Subfields: Accounting, Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/c15a7bca71335bd04da4d79ead5a361be8cf4d45

Citations in the corpus

• The Impact of Fiscal Decentralization: A Survey (2015, unknown): “…of decentralization (i.e. the political and administrative ones) and the interconnections crucial for GDP growth.8 8 Likewise, Enikolopov and Zhuravskaya (2007) and Rodriguez-Pose and Ezcurra (2011) extend the analysis to political features of decentralization in relation to economic growth.”