Growth and Institutional Change: The Influence of the Spanish Regionalisation Process on Economic Performance

Abstract

The relationship between institutional change and economic growth has been attracting great attention in recent years. However, despite some notable exceptions, researchers have been wary to approach this topic empirically. This paper represents an empirical attempt to try to unravel the impact on economic performance of what has been one of the most significant processes of institutional change in Western Europe in the past few decades—the regionalisation process—by taking the case of Spain, one of the countries where the shift from a highly centralised to a decentralised structure has been most profound. Results show that, at least in the early stages, the emergence of the Spanish regional state has had slightly beneficial effects on the relative growth performance of regions achieving the greatest level of autonomy when compared with their growth rates in the high point of Spanish centralism. Nevertheless, it is still too early to assert whether this positive influence will be a long-lasting one or can be attributed mainly to the dynamics of institutional change and, thus, will wane with time.