Decentralization and Political Institutions

43 Pages Posted: 13 Jul 2006 Last revised: 12 Jan 2011

See all articles by Ruben Enikolopov

Ruben Enikolopov

New Economic School; Institute of Political Economy and Governance; ICREA; Universitat Pompeu Fabra; Barcelona GSE

Ekaterina Zhuravskaya

Paris School of Economics (PSE)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2006


Does fiscal decentralization lead to more efficient governance, better public goods, and higher economic growth? This paper tests Riker''s theory (1964) that the results of fiscal decentralization depend on the level of countries'' political centralization. We analyze crosssection and panel data from up to 75 developing and transition countries for 25 years. Two of Riker''s predictions about the role of political institutions in disciplining fiscally-autonomous local politicians are confirmed by the data. 1) Strength of national political parties significantly improves outcomes of fiscal decentralization such as economic growth, quality of government, and public goods provision. 2) In contrast, administrative subordination (i.e., appointing local politicians rather than electing them) does not improve the results of fiscal decentralization.

Keywords: decentralization, political institutions, parties, quality of government, growth

JEL Classification: H1''8 H4''8 H70

Suggested Citation

Enikolopov, Ruben and Enikolopov, Ruben and Zhuravskaya, Ekaterina, Decentralization and Political Institutions (November 1, 2006). CEFIR Working Paper, Journal of Public Economics, Vol. 91, 2007, Available at SSRN: or

Ruben Enikolopov

New Economic School ( email )

Skolkovskoe shosse 45
Moscow, Skolkovo 143026

Institute of Political Economy and Governance ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005

ICREA ( email )

Passeig Lluís Companys, 23
Barcelona, 08010

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005

Barcelona GSE ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005

Ekaterina Zhuravskaya (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014

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