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Federalism, decentralisation and corruption

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  • Freille, Sebastian
  • Haque, Mohammad Emranul
  • Kneller, Richard Anthony

Abstract

We investigate the empirical relationship between decentralisation and corruption. Using a newly assembled dataset containing data for up to 174 countries, we revisit the empirical evidence and seek to explain some of the inconsistent results that exist in the literature. We find that not only results differ due to the use of different specifications and data but more importantly because previous research overlooks the relationship between different dimensions of decentralisation. We propose an approach aimed at exploring the aggregate effect of decentralization on corruption. In this context, we analyze the existence of direct and indirect effects of these aspects on corruption. Our results suggest that fiscal (market) decentralisation is associated with lower corruption. However, we also find that constitutional decentralisation (federalism) is associated with higher corruption. Furthermore, we find that certain forms of political decentralisation worsen the positive effect of constitutional centralization on corruption. Finally, other forms of decentralisation such as spatial decentralisation do not appear to have a strong association with corruption. Our results suggest the possibility that previous empirical work may grossly overestimate de aggregate impact of decentralization and corruption.

Suggested Citation

  • Freille, Sebastian & Haque, Mohammad Emranul & Kneller, Richard Anthony, 2007. "Federalism, decentralisation and corruption," MPRA Paper 27535, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27535
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    References listed on IDEAS

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    Cited by:

    1. Joan Rosselló Villalonga, 2018. "Fiscal centralization: a remedy for corruption?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 457-474, November.
    2. Liliana Proskuryakova & Gulnara Abdrakhmanova & Hans Pitlik, 2013. "Public sector e-innovations. E-government and its impact on corruption," HSE Working papers WP BRP 04/STI/2013, National Research University Higher School of Economics.
    3. Stefan Voigt & Lorenz Blume, 2012. "The economic effects of federalism and decentralization—a cross-country assessment," Public Choice, Springer, vol. 151(1), pages 229-254, April.
    4. Kamel TOUATI, 2020. "Les technologies de l’information et de la communication réduisent-elles la corruption ? Le cas des pays arabes," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 52, pages 21-38.
    5. Lessmann, Christian & Markwardt, Gunther, 2010. "One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats," World Development, Elsevier, vol. 38(4), pages 631-646, April.
    6. Kodila Tedika, Oasis, 2012. "Empirical Survey on the Causes of the Corruption [Aperçu empirique sur les causes de la corruption]," MPRA Paper 41484, University Library of Munich, Germany.
    7. Marcel Gérard & Fernando M.M. Ruiz, 2009. "Corporate Taxation and the Impact of Governance, Political and Economic Factors," CESifo Working Paper Series 2904, CESifo.
    8. Meričková Beáta Mikušová & Bašteková Andrea & Stejskal Jan & Pekár Bernard, 2017. "Economic, Political, Social Factor of Corruption in the Slovak Republic," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 10(1), pages 99-120, June.
    9. Stojcic, Nebojsa & Suman Tolic, Meri, 2018. "Direct and indirect effects of fiscal decentralisation on economic growth," MPRA Paper 108762, University Library of Munich, Germany, revised May 2019.

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    More about this item

    Keywords

    Fiscal decentralisation; Corruption; Federalism; Unitarism; Political Institutions;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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