Decentralization, Institutions and Economic Growth: Further Investigation

Decentralization improves the public provision of local public goods and services through efficient utilization of scarce resources, which result in enhanced economic growth. But the empirical literature lacks consensus on the association between decentralization and economic growth. In this context...

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Bibliographic Details
Published in:City University Research Journal 2019-01, Vol.9 (4), p.794-804
Main Authors: Khan, Muhammad Jehangir, Nadeem, Amir, Ahmad, Iftikhar, Arif, Muhammad Zeeshan
Format: Article
Language:English
Subjects:
Accountability
Decentralization
Economic growth
Efficiency
Expenditures
GDP
Government spending
Gross Domestic Product
Growth models
Investigations
Variables
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Summary:Decentralization improves the public provision of local public goods and services through efficient utilization of scarce resources, which result in enhanced economic growth. But the empirical literature lacks consensus on the association between decentralization and economic growth. In this context, the second-generation theories of fiscalfederalism highlighted the need for robust institutional structure. Hence, in this study we investigate the effect of institutions and its interaction with decentralization on growth, using panel data from 1984 to 2012. We found that the complementarity between institutions and decentralization are instrumental for economic growth. Furthermore, the findings reveal that local representatives ' overexposure to voice and accountability results in lower service delivery.
ISSN:2220-9174
2409-0441