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Decentralization and growth: what if the cross-jurisdiction approach had met a dead end?

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  • Pierre Salmon
Abstract
The relationship between decentralization and economic growth is generally studied from a perspective stressing universal or quasi-universal regularities across jurisdictions. That approach has generated many insights but seems to reach its limits. The paper explains why it allows contrasting positions with regard to the benefits of decentralization even among proponents of free and competitive markets. And it seems from the empirical literature that no robust and economically significant cross-jurisdiction relation between decentralization and economic performance or growth, except perhaps their independence, has been found. The absence of a relation valid across jurisdictions, however, does not entail the absence of relations specific to each. When jurisdiction specificity is very strong, it is normally difficult to say if there is a relation between observable decentralization arrangements in a jurisdiction and its observable economic performance. However, this may be different under particular circumstances reflecting disequilibrium. Episodes of growth acceleration, when they follow persistent underperformance and include changes in decentralization arrangements, may provide some empirical support to the claim that the relation exists. Copyright Springer Science+Business Media New York 2013

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  • Pierre Salmon, 2013. "Decentralization and growth: what if the cross-jurisdiction approach had met a dead end?," Constitutional Political Economy, Springer, vol. 24(2), pages 87-107, June.
    • Handle: RePEc:kap:copoec:v:24:y:2013:i:2:p:87-107
    DOI: 10.1007/s10602-013-9137-8
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    More about this item

    Keywords

    Decentralization; Economic growth; Public choice; Yardstick competition; Reforms; D72; H70; O40;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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