Decentralized provision of public inputs, government responsiveness to local needs, and regional growth: evidence from Spain

• Autores: Albert Solé Ollé, Alejandro Esteller Moré
• Localización: XIII Encuentro de Economía Pública: Playadulce (Almería), Hotel Playadulce. 2 y 3 de febrero, 2006, ISBN 84-8240-795-3, pág. 13
• Idioma: inglés
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• Resumen

  • The well-known �Decentralization Theorem� (Oates, 1972) establishes the superiority of decentralized public provision over the centralized case, which is not so sensitive to the diversity of expenditure needs among territories. We test this hypothesis using a unique Spanish database that provides information on road and educational infrastructure investment and capital stocks by region both before and after the decentralization of such responsibilities. We find that investment in both categories is much more sensitive to regional output and to infrastructure users and costs when sub-central governments have the responsibility over such services.

    This indirectly suggests that in the centralized regime the composition of the capital stock differs from the growth-maximizing one, and so economic growth is enhanced by means of decentralization.