Regional Economic Disparities and Decentralisation

Abstract

The study of the influence of decentralisation on economic growth has received some attention in recent years, but very few studies deal with its impact on regional inequalities. This paper analyses the impact of both fiscal and political decentralisation on regional inequalities using alternative measures for a sample of 17 OECD countries. In order to check for other possible influences, the study also includes measures of public-sector size and the type of party in government. The final section studies the relevance of fiscal decentralisation in the regional convergence process observed by several authors during the past two decades. The research reveals a strong negative correlation between decentralisation, especially fiscal decentralisation, and regional inequalities, and also a positive influence of decentralisation on regional convergence.