Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

Institutions and growth : a simplified theory of decentralization and corruption

Abstract : This paper aims at giving a theoretical background to the, some- times observed, puzzling inverse correlation between the degree of de- centralization and economic growth. We provide evidence that there is some interaction between decentralization and corruption in ex- plaining growth. Within an endogenous growth model, we analyze the problem of a benevolent central government trying to determine the optimal degree of fiscal decentralization. Specifically, it can pro- duce a public good directly, but inefficiently, or it can delegate some (or all) of the production to more efficient local bureaucrats. In the latter case, however, some resources will be wasted because of corrup- tion and the costs linked to monitoring expenditures. With respect to the benchmark case, then, the possibility of corruption yields both a distorted allocation of resources (insufficient decentralization) and an overall under provision of the public good.
Document type :
Preprints, Working Papers, ...
Complete list of metadata
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Wednesday, December 1, 2021 - 11:49:46 AM
Last modification on : Friday, March 25, 2022 - 3:37:50 AM


Publisher files allowed on an open archive




Anton Granik, Francesco Saraceno. Institutions and growth : a simplified theory of decentralization and corruption. 2012. ⟨hal-03461200⟩



Record views


Files downloads