Working Paper: CEPR ID: DP8211
Authors: Roberto Ezcurra; Andrés Rodríguez-Pose
Abstract: This paper examines whether, given the increasing salience of subnational governments, political decentralisation has an impact on overall economic performance. It uses panel data analyses in order to determine the association between a number of the different indices of political decentralisation developed over the last decade and a half with two basic measures of economic performance: changes in aggregate GDP per head and the evolution of within-country territorial inequalities. The results highlight that, in the case of economic growth, the perception we may have of how political decentralisation affects economic performance is highly contingent on the index we use, with results ranging from a mildly positive to a neutral influence of political decentralisation on economic growth. For regional inequalities, political decentralisation seems to lead to a rise in disparities, regardless of how political decentralisation is measured.
Keywords: economic growth; europe; political decentralisation; regional disparities; regions
JEL Codes: H70; R11; R59
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political decentralisation (H77) | economic growth (O49) |
| greater authority exercised by regional governments (H10) | economic growth (O49) |
| political decentralisation (H77) | regional inequalities (R11) |
| political decentralisation indices (Hooghe et al. 2008, Brancati 2006, Treisman 2002) (H77) | economic growth (O49) |
| political decentralisation indices (Lijphart 1999 and Woldendorp et al. 2000) (H77) | economic growth (O49) |