Decentralization in Africa and the nature of local governments’ competition: evidence from Benin

Abstract

Without denying particular dimensions of the decentralisation in Sub-Saharan countries, this paper applies standard reasoning from the …scal federalism literature to a developing country and tests the existence of strategic interactions among local Beninese governments, called 'communes'. We …rst propose a two-jurisdiction model of public expenditure interactions, considering a constrained Nash equilibrium to capture the extreme poverty of some communes. We show that spillovers among jurisdictions involve strategic behaviours of local o¢ cials who have su¢ cient levels of …scal resources. Second, by estimating a spatial lag model, our analysis provides evidence for the presence of strategic interactions in Benin, contingent on communes' …scal autonomy. Such interactions arise among communes which are geographically or ethnically close. We also highlight both an opportunistic behaviour of local governments before local elections and an e¤ect of partisan a¢ liations. This African democracy appears to be as concerned as developed democracies with strategic …scal interactions.JEL Classi…cation: D72, H2, H7

Research on the Structural Features and Influential Factors of the Spatial Network of China’s Regional Ecological Efficiency Spillover

“…Competition is the common mechanism of mutual effect among regions [14][15][16][17]. The existing literature has proved that local governments interact and influence each other in both developed and developing countries.…”

Does Decentralization Facilitate Access to Poverty-Related Services? Evidence from Benin

“…Moreover, interjurisdictional competition may enhance accountability: local citizens encourage incumbents to increase the efficiency of public spending through a "vote with feet" (Tiebout, 1956) or a "yardstick competition" (Salmon, 1987, Besley andCase, 1995). 5 Few studies have examined the relevance of this phenomenon in developing countries: Arze, Martinez-Vasquez, and Puwanti (2008) suggest a process of yardstick competition between local governments in Indonesia; Caldeira, Foucault, and Rota-Graziosi (2008) establish the existence of strategic complementarities of local public goods among Beninese communes.…”

Spatial interdependence and spillovers of fiscal grants in Benin: Static and dynamic diffusions

“…5 Studies on spatial interactions have thus so far focused on the spending side (see for e.g. Caldeira et al, 2015;Arif et al, 2019), where local governments have greater discretion in decisions.…”

“…In doing so, we go a step further compared to previous research that has captured spatial interdependence in Benin through geographical neighborliness (see for exampleCaldeira et al, 2015).…”

“…See for instance the empirical evidence byCase et al (1993),Baicker (2005),Castro et al (2015),Oyun (2017),Bordignon et al (2003),Allers and Elhorst (2005),Padovano and Petrarca (2014),Caldeira et al (2015),Foucault et al (2008), among others. 5 For insights on expenditure allocation to subnational governments in developing countries, see the latest report from the World Observatory on Subnationanl Finance and Investment (UCLG & OECD, 2016; OECD & UCLG, 2019).…”