Does decentralization matter for regional disparities? A cross-country analysis

Abstract

This paper looks at the relationship between fiscal and political decentralization and the evolution of regional inequalities in a panel of 26 countries -19 developed and 7 developing -for the period between 1990 and 2006. Using an instrumental variables method, it finds that whereas for the whole sample decentralization is completely dissociated for the evolution of regional disparities, the results are highly contingent on the level of development, the existing level of territorial inequalities, and the fiscal redistributive capacity of the countries in the sample. Decentralization in high income countries has, if anything, been associated with a reduction of regional inequality. In low and medium income countries, fiscal decentralization has been associated with a significant rise in regional disparities, which the positive effects of political decentralization have been unable to compensate. Policy preferences by subnational governments for expenditure in economic affairs, education, and social protection have contributed to this trend.JEL Classifications: H11, H71, R11

Addressing poverty and inequality in the rural economy from a global perspective

“…The process is recognised to increase the capacity of local actors to engage in the definition of regional priorities and in the promotion of effective uses of local resources to tackle regional issues, such as territorial inequalities (OECD 2006;Rodríguez-Pose and Ezcurra 2010). For rural areas, largely failed under topdown methods to address rural change (Ellis and Biggs, 2001), decentralisation offers "sub-national governments and local organizations an increased role in rural development processes" (Bebbington et al, 2008: 3-4), even where it is "uneven and incomplete" (ibid).…”

Decentralization and the Welfare State: What Do Citizens Perceive?

“…Davoodi and Zou, 1998;Thießen, 2003;Rodríguez-Pose and Bwire, 2004;Iimi, 2005;Rodríguez-Pose and Ezcurra, 2011) and between decentralization and regional inequalities (e.g. Gil Canaleta et al, 2004;Ezcurra and Pascual, 2008;Lessmann, 2009;Rodríguez-Pose and Ezcurra, 2010). The emphasis on cross-country macroanalyses has been complemented by a spate of recent studies using microdata aimed at untangling the complex relationship between decentralization, on the one hand, and poverty (Sepúlveda and Martínez-Vázquez, 2011), interpersonal inequality (Morelli and Seaman, 2007;Tselios et al, 2012), or social capital (De Mello, 2011), on the other, respectively.…”

Local economic development in Africa: Global context and research directions

“…In this reshaped terrain for local and regional development, planning for local economic development (LED) is now a widespread facet of international development planning, particularly in the context of pervasive trends towards decentralisation -the deliberate and planned transfer of resources away from central state institutions -and of shifting structures of government and governance (Rodriguez-Pose & Tijmstra, 2007;Christensen & Van der Ree, 2008;Rodriguez-Pose & Sandall, 2008;Rodriguez-Pose & Ezcurra, 2009). Localities are increasingly viewed as 'pivotal sites of competitiveness in a new global economy' (Valler & Wood, 2010:140) as globalisation gives LED strategies 'a bigger role to play in international development ' (Rodriguez-Pose, 2008a:24).…”