Decentralization and Corruption : Evidence across Countries
The relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design. The theoretical literature makes ambiguous predictions abo...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/02/438331/decentralization-corruption-evidence-across-countries http://hdl.handle.net/10986/19852 |
| Summary: | The relationship between
decentralization of government activities and the extent of
rent extraction by private parties is an important element
in the recent debate on institutional design. The
theoretical literature makes ambiguous predictions about
this relationship, and it has remained virtually unexamined
by empiricists. The authors make a first attempt at
examining the issue empirically, by looking at the
cross-country relationship between fiscal decentralization
and corruption as measured by a number of different indices.
Their estimates suggest that fiscal decentralization in
government spending is significantly associated with lower
corruption. Moreover, they find that the origin of a
country's legal system - for example, civil versus
common legal code - performs extremely well as an instrument
for decentralization. The estimated relationship between
decentralization, when so instrumented, and corruption is
even stronger. The evidence suggests a number of interesting
areas for future work, including investigating whether there
are specific services for which decentralized provision has
a particularly strong impact on political rent extraction,
and understanding the channels through which
decentralization succeeds in keeping corruption in check. |
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