Does Decentralisation Make Government More Efficient and Effective?

Abstract

In this paper we use a broad cross-national sample to test decentralisation's relationship with two important indicators of the quality of governance: efficiency and effectiveness. Contrary to much of the conventional wisdom, we find that the effects of decentralisation are minimal when controlling for basic structural variables such as per capita GDP and degree of democracy. In addition we find that different types of decentralisation – fiscal, administrative, and political – have differing and sometimes opposing impacts on the quality of governance. Finally, we find that political decentralisation in particular is associated with higher government efficiency among high GDP per capita countries while it is associated with lower government efficiency among low GDP per capita countries.

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