Working Paper: CEPR ID: DP15651
Authors: Yohan Iddawela; Neil Lee; Andrés Rodríguez-Pose
Abstract: Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 356 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.
Keywords: institutions; quality of government; regions; africa; decentralisation
JEL Codes: E02; N97; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| subnational government quality (H10) | regional GDP (R11) |
| political centralization of precolonial African societies (N97) | subnational government quality (H10) |
| political centralization of precolonial African societies (N97) | regional GDP (R11) |