Types of decentralisation and governance: evidence from across the world

ACADEMIC PAPER Types o decen alisa ion and go e nance: E idence om ac oss he wo ld Ped o J. Camões CICP/Uni e sidade do Minho, Po ugal Co espondence Ped o J. Camões, CICP/Uni e sidade do Minho, Po ugal. Email: [email p o ec ed].p Funding in o ma ion Fundaç~ ao pa a a Ciência e a Tecnologia The ela ionship be ween decen alisa ion and quali y o go e nmen is heo e i- cally ambi alen and emains empi ically mixed. The classical heo y a gues ha decen alisa ion imp o es he abili y o go e nmen s o ully espond o collec i e p e e ences. A di e en pe spec i e poin s o some disad an ages ela ed o p ob- lems o coo dina ion and ine ia. This pape p o ides a wo ldwide c oss-sec ional analysis ha es s hese wo con as ing iews and he e ec o democ acy. The esul s obus ly suppo ha (a) decen alisa ion has an independen and posi i e e ec on he quali y o go e nmen , bu ha (b) poli ical, iscal and adminis a i e ypes o decen alisa ion ha e qui e di e en e ec s and ha (c) he e ec is a en- ua ed when he e ec o democ acy is conside ed. Toge he , hese esul s shed ligh wi h ega d o he op imal design o e o ms owa ds decen alisa ion ac oss he wo ld. 1|INTRODUCTION Decen alisa ion, he e i o ial o ganisa ion o he s a e and public sec o s, and i s ela ion wi h go e nmen pe o mance is an impo an elemen in he ecen deba e on ins i u ional design. Bu i is no a new deba e. Small go e nmen s in he o m o small e i o ies ha e been p aised since Pla o, A is o le, Rosseau, Mon esquieu and J. S. Mill, among o he s. These a angemen s a e ega ded as app op ia e o p o ec he indi idual igh s agains y anny o he majo i y and o encou age poli ical pa icipa ion and he accommoda ion. Pa icula ly, libe al au ho s we e specially keen on p aising he ci ic i ues o local democ acy. Fo example, de Tocque ille claimed ha “municipal ins i- u ions cons i u e he s eng h o ee na ions. Town mee ings a e o libe y wha p ima y schools a e o science. A na ion may es ablish a ee go e nmen , bu wi hou municipal ins i u ions, i canno ha e he spi i o libe y.”To J. S. Mill, ‘ ee and popula municipal ins i u- ions’a e pa o he “peculia aining o a ci izen”, and he p ac ical pa o he poli ical educa ion o a ee people. Acco dingly, ‘mode n go e nmen al sys ems, e en hose o uni a y s a es, a e all mul ile el sys ems’(B e on, 1998, p. 181). These a gumen s abou democ acy and libe y a e mos ly no ma- i e. On posi i e g ounds, he ques ion is whe he decen alisa ion is impo an and how i makes a di e ence. Do mo e decen alised coun ies ha e be e quali y o go e nmen ? Mo eo e , do all ins i u- ional designs o decen alisa ion ( ypes) ha e he same e ec ? Acco ding o he classical heo y, decen alisa ion imp o es he abili y o go e nmen s o ully espond o he collec i e p e e ences. A di - e en pe spec i e poin s o some disad an ages ela ed o p oblems o coo dina ion and ine ia. In sum, he ela ionship be ween decen- alisa ion and quali y o go e nmen is heo e ically ambi alen and emains empi ically mixed. This pape p o ides a wo ldwide empi ical analysis ha es s hese wo con as ing iews. In pa icula , i add esses he speci ic impac o poli ical, iscal and adminis a i e decen alisa ion and he ole played by democ a ic ins i u ions. The esul s show ha (a) decen alisa ion has indeed an independen and posi i e e ec on he quali y o go e nmen , bu ha (b) he h ee ypes o decen alisa- ion ha e subs an i ely di e en e ec s and ha (iii) he e ec o decen alisa ion is a enua ed when he e ec o democ acy is consid- e ed. Toge he , hese esul s shed ligh wi h ega d o he op imal design o e o ms owa ds decen alisa ion ac oss he wo ld. The nex sec ion p esen s a b ie pic u e o he gene al li e a u e on he cos s and bene i s o decen alisa ion, including he huge amoun o empi ical esul s. The hi d sec ion ocuses solely on he This s udy was conduc ed a Resea ch Cen e in Poli ical Science (UID/CPO/0758/2019), Uni e si y o Minho and suppo ed by he Po uguese Founda ion o Science and Technology and he Po uguese Minis y o Educa ion and Science h ough na ional unds. Recei ed: 5 June 2020 Accep ed: 20 Augus 2020 DOI: 10.1002/pa.2435 J Public A ai s. 2022;22:e2435. wileyonlinelib a y.com/jou nal/pa © 2020 John Wiley & Sons L d 1o 12 h ps://doi.o g/10.1002/pa.2435 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License link o decen alisa ion and quali y o go e nmen pe o mance and e iews he mos impo an empi ical a gumen s as well as de i es h ee main hypo hesis. Sec ion ou p esen s he da a and me hods, and sec ion i e discusses he indings. 2|THEBENEFITSANDCOSTSOF DECENTRALISATION The ad an age o small go e nmen s o small e i o ies is seen as he app op ia e a angemen s o p o ec agains y anny o he majo i y, p omo e poli ical pa icipa ion, accommoda e di e en and o en con- lic ing iews and o espond o ci izens’demands (Inman & Rubin eld, 1997). In e y simple e ms, he mos impo an heo e ical a gumen conce ning decen alisa ion is ha i can make go e nmen mo e accoun able and esponsi e o he go e ned (Fague , 2014). The a gumen s conce ning p oximi y a e la e de eloped in explici economic e ms by Tiebou (1956). He o mula ed he ad an- ages o decen alisa ion and o he i ues o smalle uni s o go e n- men because hey we e mo e capable o p omo ing a close ma ch be ween as es and p e e ences o he ci izens o a locali y and a local go e nmen ha is able o adjus he policies o hose p e e ences. The di e ences o policies among local go e nmen s p omo e ho i- zon al compe i ion among local go e nmen s. Bu o he ma ch o occu , a necessa y condi ion has o be me : geog aphic mobili y o ci - izens o sea ch o he mos p e e ed policy mix. In Tiebou 's wo ds, ci izens “ o e wi h hei ee ”. Acco ding o he model, e iciency o public p o ision is achie ed. A new “second-gene a ion heo y o iscal ede alism”eme ged o p o ide new insigh s in o he s uc u e and wo king o dec- en alised uni a y and ede al sys ems (Oa es, 2005), pa icula ly he implica ions o incen i es c ea ed by poli ical and iscal ins i u ions (Weingas , 2014). This di e en pe spec i e poin s ou some impo - an ca ea s ha ul ima ely make he ne e ec o decen alisa ion on ou pu as inde e mina e (T eisman, 2006). The main disad an ages o decen alisa ion a e ela ed o p oblems o coo dina ion and ine ia. Fo example, T eisman (1999) o malises a game heo y model in which decen alised coun ies, pa icula ly in he g oup o less de el- oped, may ha e mo e di icul y in abandoning icious cycles o ine i- ciency. T eisman's a gumen is ha ‘decen aliza ion may complica e a emp s a mac oeconomic s abilisa ion and economic e o ms’.In he end, he ne e ec o hese bene i s and cos on ou pu (economic pe o mance and go e nance) is inde e mina e. In consequence, he empi ical analysis o he e ec o decen alisa ion also p oduce e y mixed esul s. 2.1 |Empi ical esul s The i s s and o empi ical s udies ocused on he e ec s o iscal decen alisa ion. This line o esea ch was p oduced by economis s s essing he ole o sel -in e es ed and o e spending poli icians and became known as he “sea ching o Le ia han”li e a u e. The idea o a Le ia han ha o e spends pe manen ly was inspi ed in B ennan and Buchanan (1980). Ma low (1988) analysed ime se ies da a (1946–1985) o he USA and ound ha iscal decen alisa ion is associa ed wi h slowing o alling public sec o size. In a panel analysis o 18 OECD (1980–2000), Baska an (2011) ound ha decen alisa- ion leads o an inc ease in he size o go e nmen . This esul s we e i espec i e o he ideology o he cen al go e nmen , wi h no sup- po o his ini ial hypo hesis ha he e ec o iscal decen alisa ion on public sec o size depends on go e nmen 's ideology; howe e , he magni ude o he ma ginal e ec is la ge unde a le - han unde a igh -wing go e nmen . Some analysis p esen an unequi ocally posi i e indings. Lessmann (2009), bo h wi h c oss sec ion and panel da a o OECD coun ies (1982–2000), inds ha highe a deg ee o iscal decen ali- sa ion is associa ed wi h lowe egional dispa i ies. Hence, poo egions expe ience no disad an ages om decen alisa ion and, ins ead, appea o bene i . Lig ha and Van Oudheusden (2015) look a whe he iscal decen alisa ion is associa ed wi h ci izens’ us in go e nmen and ela ed ins i u ions, wi h he a gumen ha mo e decen alised iscal sys ems imp o e pe cei ed go e nmen s’ espon- si eness o ci izens’p e e ences. Thei su ey da a om up o 42 coun ies o e he pe iod 1994–2007 con i m his posi i e ela- ionship, al hough his posi i e associa ion wi h iscal decen alisa ion does no ex end o o he , non-go e nmen - ela ed ins i u ions. Baska an, Feld, and Schnellenbach (2016) sugges ed ha decen alisa- ion may also inc ease g ow h by aising he abili y o he poli ical sys- em o inno a e and ca y ou e o ms. Howe e , when poli ical decen alisa ion is conside ed, he esul s appea mo e nega i e o , a leas , mixed. The esul s in Rodden and Wibbels (2002), compa ing 46 ede al and uni a y de eloping coun ies in he 197,995 pe iod, sugges ha poo pe o mance is mo e likely in ede al coun ies. His a gumen is ha “de ol ed poli i- cal and iscal ins i u ions c ea e incen i es o sub-na ional go e n- men s o a oid o delay he poli ical cos s o iscal adjus men .”This a gumen o a oidance o delay was con i med by T eisman (2000) ha ound no di ec e ec on in la ion, bu ha poli ical decen alisa- ion makes i mo e di icul o change he pa e ns o e olu ion o in la ion o iscal policy because i c ea es mo e e o playe s leading o “lock-in”e ec . Those decen alised coun ies ha s a wi h low in la ion a es, in la ion inc eases slowly; he decen alised coun ies ha s a wi h highe le els o in la ion end o emain wi h highe le els and o expe ience mo e di icul y in educing i . A di e en iew is p esen ed in Blancha d and Shlei e (2001), which a ibu e success o China, as opposed o Russia o he p esence o poli ical decen alisa ion. 3|DECENTRALISATION AND QUALITY OF GOVERNMENT The ela ionship be ween decen alisa ion o go e nmen ac i i ies and hei pe o mance o quali y is an impo an elemen in he ecen deba e on ins i u ional design. The i s empi ical pape o add ess 2o 12 CAMÕES 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License empi ically he b oad concep o quali y o go e nmen was La Po a, Lopez-de Silanes, Shlei e , and Vishny (1999) conside ing a la ge num- be o measu es o go e nmen in e en ion, public sec o e iciency, public good p o ision, size o go e nmen and poli ical eedom and s udied a la ge c oss sec ion o coun ies. Thei econome ic analysis sugges s ha coun ies ha a e poo , close o he equa o , e hno- linguis ically he e ogeneous, use F ench o socialis laws o ha e high p opo ions o Ca holics o Muslims exhibi in e io go e nmen pe - o mance. Addi ionally, la ge go e nmen s end o pe o ming be e . A well-de ined body o empi ical li e a u e in oduces speci ically decen alisa ion as key independen a iable. As e iew in he p e i- ous sec ion, he esul s also globally mixed. The i s s udy es ed he ela ionship be ween i e measu es o (poli ical and iscal) decen ali- sa ion and he le el o co up ion and he p o ision o public se ices as hei measu es o he quali y o go e nmen (T eisman, 2002). The indings, using a la ge sample o 67–88 coun ies, showed a weak ela ionship be ween decen alisa ion and co up ion and low social se ice p o ision. In his decade, And eas Ky iacou, O iol Roca-Sagalés, and hei colleagues published a se ies o h ee pape s analysing his ela ion. The i s joins a c oss-sec ional and panel analysis o ind ha iscal decen alisa ion imp o es go e nmen quali y bu anes when i is accompanied by poli ical decen alisa ion Ky iacou and Roca- Sagalés (2011a). La e , hey ound ha his posi i e e ec is mi iga ed in he p esence o egional elec ions and mul ile el go e nmen (Ky iacou & Roca-Sagalés, 2011b). In hei las piece, hey sugges ed ha a p ocess o iscal decen alisa ion, accompanied by measu es o imp o e he quali y o go e nmen , would be an e ec i e s a egy o educing egional inequali ies (Ky iacou, Muinelo-Gallo, & Roca- Sagalés, 2017). Unde his b oad and e y o en imp ecise heme o quali y o go e nmen (Ro hs ein & Teo ell, 2008), he concep and measu es o co up ion a e p obably he mos empi ically s udied dimension. Fisman and Ga i (2002), wi h a ela i ely small sample o 28–55 coun ies, ound ha iscal decen alisa ion o go e nmen expendi- u e is s ongly and signi ican ly associa ed wi h lowe co up ion. These esul s pe sis when decen alisa ion is ins umen ed by he o i- gin o a coun y's legal sys em. Fan, Lin, and T eisman (2009) s udied how poli ical decen alisa ion can a ec he equency and cos liness o b ibe ex ac ion on he pa o co up o icials and ound ha coun ies wi h a la ge numbe o go e nmen o adminis a i e ie s and a la ge numbe o local public employees, epo ed b ibe y was mo e equen . When local o cen al go e nmen s ecei ed a la ge sha e o GDP in e enue, b ibe y was less equen . O e all, hey in e p e ed hese esul s as sugges ing he dange o uncoo dina ed en -seeking as go e nmen s uc u es become mo e complex. 3.1 |Which ype o decen alisa ion? I is clea ha in his signi ican and ich empi ical li e a u e, he consen- sus is s ill o be achie ed, la gely because a signi ican numbe o ques- ions emain open. Ne e heless, some ele an poin s can be b ough o he su ace. Abo e all, he e is a di e ence be ween iscal and poli i- cal decen alisa ion which is exp essed in he di e en e ec s in quali y o go e nmen shown in empi ical li e a u e. This is no su p ise because hese a e no al e na i e measu es o he same concep as some w ongly li e a u e s ill assumes. Ra he , hese a e wo di e en ins i u- ional mechanisms ha ha e di e en heo e ical and empi ical implica- ions. Fo example, O'Dwye and Zibla (2006) ound ha he di e en ypes o decen alisa ion ha e di e ing and some imes opposing impac s on he quali y o go e nance. Speci ically, poli ical decen alisa- ion is associa ed wi h highe go e nmen e iciency among high GDP pe capi a coun ies, while i is associa ed wi h lowe go e nmen e i- ciency among low GDP pe capi a coun ies. Mo eo e , he li e a u e, by ocusing almos exclusi ely on he poli ical and iscal ypes, igno es he concep o adminis a i e decen- alisa ion, ha is, he dis ibu ion o adminis a i e s uc u es and employe s and/o unc ions (Lessmann & Ma kwa d , 2016). As o long has been acknowledged, his is a di e en ins i u ional mecha- nism ha is expec ed o ha e s ill di e en implica ions o he quali y o go e nmen (Kau man, 1969). Figu e 1shows he sca e s o he ela ion be ween he h ee di e en ypes o decen alisa ion— iscal, adminis a i e and poli ical—and quali y o go e nmen . The posi i e bi- a ia e ela ionships a e common, in acco dance wi h he gene al expec a ion o he li e a u e, bu he he pa e ns a e no en i ely coinciden . The e o e he i s wo hypo heses a e: H1 :Decen aliza ion has an independen and posi i e e ec on he quali y o go e nmen ; H2 :Poli ical, iscal and adminis a i e ypes o decen aliza ion ha e di e en e ec s on he quali y o go e nmen . 3.2 |The ole o democ acy and accoun abili y? The speci ic ole played o speci ic poli ical and social ins i u ions also canno be neglec ed ei he . Ka ls öm (2015) no es ha he po en ial o decen alisa ion o cu b co up ion is dependen on he p esence o ins i u ions ha gi e ci izens in o ma ion on go e nmen beha iou and he capaci y o ac upon he gi en in o ma ion. In he same ash- ion (Lessmann and Ma kwa d (2010)) p esen s empi ical esul s sugges ing ha he bene i s o decen alisa ion only occu i he e is a supe iso y body such as a ee p ess, which is o en lacking in a sub- s an ial numbe o coun ies. His policy implica ion is ha a ee p ess is a necessa y p e-condi ion o success ul decen alisa ion p og ammes. Democ acy plays a de e minan ole in his link be ween decen- alisa ion and go e nance because i is he mos impo an ins i u- ional se ing o ha e ci izens in o med abou go e nmen beha iou . Again, he empi ical esul s on ole o democ acy emain unce ain. Fo one hand, O'Dwye and Zibla (2006) ound ha he e ec s o decen alisa ion a e minimal when con olling o basic s uc u al a i- ables such as he deg ee o democ acy and pe capi a GDP. Fo he CAMÕES 3o 12 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License o he , he e ec o democ acy is howe e no ound in Ky iacou and Roca-Sagalés (2011a) s udy. Thei main conclusion, ha iscal decen- alisa ion has no e ec on go e nmen quali y when accompanied by poli ical decen alisa ion, does no change e en when con olling o he deg ee o democ a ic ma u i y ac oss coun ies. Figu e 2depic s wo di e en pa e ns in he ela ionship obse ed in Figu e 1depending on which g oup we look a : democ a ic and non- democ a ic coun ies. The e o e, in line wi h Ka ls öm (2015), he second hypo hesis conside s how he le el o democ acy mode a es he ela ion- ship be ween decen alisa ion and he quali y o go e nmen . Las ly, he ollowing hi d hypo hesis conce ning he oleo democ acyis: H3 :The e ec o decen aliza ion is a enua ed when he e ec o democ acy is conside ed. 4|EMPIRICAL STRATEGY In acco dance wi h he hypo heses p esen ed in he p e ious sec ion, he main objec i e o his pape is o empi ically es (a) he independen e ec o decen alisa ion on he quali y o go e nmen ; (b) o dis inguish he di e ences among he ypes o decen alisa ion and (c) add ess he ole played by democ acy in he ela ionship. A wo ldwide analysis is equi ed, and he ollowing s ylised model is es ed. QoGi=αDeci+βDemi+γXi+ϵ, whe e QoG is he quali y o go e nmen , Dec is he decen alisa ion (poli ical, iscal and adminis a i e), Dem is he index o democ acy, and Xis a se o con ol a iables. Following he poin made in Adam, Delis, and Kammas (2014) ha he e ec o decen alisa ion on go e nance is no linea bu de e mined by an in e ed U-shaped ela ionship, decen alisa ion is included in he eg essions as a second-deg ee polynomial Deci=Di+D2 i: Mos o he da a used in he analysis comes om he QoG S an- da d da a se o he Quali y o Go e nmen Ins i u e (Uni e si y o Go hembu g), which assembles an imp essi e numbe o a iables om many di e en sou ces (Teo ell e al., 2019). The excep ion was a iables aken di ec ly om I anyna and Shah (2012) who p oduced 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Poli ical Decen aliza ion Index 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Fiscal Decen aliza ion Index 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Adminis a i e Decen aliza ion Index (a) (c) (b) FIGURE 1 A–C, Poli ical, iscal, and adminis a i e decen alisa ion and quali y o go e nmen 4o 12 CAMÕES 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License Albania A gen ina Aus alia Aus ia Bahamas Bangladesh Belgium Boli ia Bo swana B azilBulga ia Canada Chile Colombia Cos a Rica C oa ia Cyp us Czech Republic Denma k Dominican Republic Ecuado El Sal ado Es onia Finland F ance Ge many Ghana G eece Gua emala Guyana Hondu as Hunga y Iceland India Indonesia I eland Is ael I aly Jamaica Japan Kenya Ko ea, Rep. La ia Libe ia Li huania Luxembou g Malawi Mali Mal a Mexico Mongolia Ne he lands New Zealand Nica agua No way Pakis an Panama Papua New Guinea Pa aguay Pe u Philippines Poland Po ugal RomaniaSenegal Se bia Sie a Leone Slo enia Sou h A ica Spain Su iname Sweden Swi ze land Taiwan T inidad and Tobago Tu key Uk aine Uni ed Kingdom Uni ed S a es U uguay ZambiaAlge ia Angola A menia Aze baijan Bah ain Bela us Bu kina Faso Came oon China Cuba Egyp E hiopia Gabon Gambia Guinea Guinea−Bissau Hai i I aq Jo dan Kazakhs an Kuwai Lebanon Madagasca Malaysia Mo occo Mozambique Namibia Nige Nige ia Oman Qa a Saudi A abia Singapo e Somalia S i Lanka Thailand Togo Tunisia Uganda Uni ed A ab Emi a es Venezuela Yemen Zimbabwe 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Poli ical Decen aliza ion Index Albania A gen ina Aus alia Aus ia Bahamas Bangladesh Belgium Boli ia Bo swana B azilBulga ia Canada Chile Colombia Cos a Rica C oa ia Cyp us Czech Republic Denma k Dominican Republic Ecuado El Sal ado Es onia Finland F ance Ge many Ghana G eece Gua emala Guyana Hondu as Hunga y Iceland India Indonesia I eland Is ael I aly Jamaica Japan Kenya Ko ea, Rep. La ia Libe ia Li huania Luxembou g Malawi Mali Mal a Mexico Mongolia Ne he lands New Zealand Nica agua No way Pakis an Panama Papua New Guinea Pa aguay Pe u Philippines Poland Po ugal RomaniaSenegal Se bia Sie a Leone Slo enia Sou h A ica Spain Su iname Sweden Swi ze land Taiwan T inidad and Tobago Tu key Uk aine Uni ed Kingdom Uni ed S a es U uguay ZambiaAlge ia Angola A menia Aze baijan Bah ain Bela usBu kina Faso Came oon ChinaCuba Egyp E hiopia Gabon Gambia Guinea Guinea−Bissau Hai i I aq Jo dan Kazakhs an Kuwai Lebanon Madagasca Malaysia Mo occo Mozambique Namibia Nige Nige ia OmanQa a Saudi A abia Singapo e Somalia S i Lanka Thailand Togo Tunisia Uganda Uni ed A ab Emi a es Venezuela Yemen Zimbabwe 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Fiscal Decen aliza ion Index Albania A gen ina Aus alia Aus ia Bahamas Bangladesh Belgium Boli ia Bo swana B azilBulga ia Canada Chile Colombia Cos a Rica C oa ia Cyp us Czech Republic Denma k Dominican Republic Ecuado El Sal ado Es onia Finland F ance Ge many Ghana G eece Gua emala Guyana Hondu as Hunga y Iceland India Indonesia I eland Is ael I aly Jamaica Japan Kenya Ko ea, Rep. La ia Libe ia Li huania Luxembou g Malawi Mali Mal a Mexico Mongolia Ne he lands New Zealand Nica agua No way Pakis an Panama Papua New Guinea Pa aguay Pe u Philippines Poland Po ugal RomaniaSenegal Se bia Sie a Leone Slo enia Sou h A ica Spain Su iname Sweden Swi ze land Taiwan T inidad and Tobago Tu key Uk aine Uni ed Kingdom Uni ed S a es U uguay ZambiaAlge ia Angola A menia Aze baijan Bah ain Bela usBu kina Faso Came oon ChinaCuba Egyp E hiopia Gabon Gambia Guinea Guinea−Bissau Hai i I aq Jo dan Kazakhs an Kuwai Lebanon Madagasca Malaysia Mo occo Mozambique Namibia Nige Nige ia OmanQa a Saudi A abia Singapo e Somalia S i Lanka Thailand Togo Tunisia Uganda Uni ed A ab Emi a es Venezuela Yemen Zimbabwe 0 .2 .4 .6 .8 1 Quali y o Go e nmen 0 .2 .4 .6 .8 1 Fiscal Decen aliza ion Index (a) (b) (c) FIGURE 2 Decen alisa ion and democ acy TABLE 1 Summa y s a is ics Va iable Mean S d. De . Min. Max. N Quali y o go e nmen 0.532 0.21 0.083 0.972 130 Go e nmen e ec i eness −0.043 0.993 −2.27 2.168 177 Con ol o co up ion −0.047 0.998 −1.609 2.41 177 Regula o y quali y −0.05 0.982 −2.518 1.965 177 Democ acy index 34.78 27.029 0 92.423 173 Poli ical decen alisa ion 0.488 0.235 0 1 154 Fiscal decen alisa ion 0.35 0.248 0.06 1 154 Adminis a i e decen alisa ion 0.32 0.28 0 0.9 154 GDP pe capi a, log 8.871 1.298 5.806 11.594 177 Go e nmen expendi u e (% GDP) 33.553 11.349 13.966 73.252 164 Schooling yea s 8.227 3.131 1.241 13.424 132 Popula ion densi y, log 4.29 1.432 0.61 9.84 177 A ea, log 11.299 2.696 0.693 16.611 177 CAMÕES 5o 12 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License TABLE 2 Decen alisa ion and quali y o go e nmen : c oss-sec ional esul s Va iables Poli ical Decen alisa ion Fiscal Decen alisa ion Adminis a i e Decen alisa ion Decen alisa ion 0.053*(0.031) 0.003 (0.025) 0.181*** (0.031) 0.067*** (0.024) 0.083** (0.038) 0.038 (0.024) E ec i e democ acy index 0.006*** (0.001) 0.005*** (0.001) 0.005*** (0.001) GDP pe capi a, log 0.079*** (0.024) 0.053*** (0.014) 0.060*** (0.018) 0.048*** (0.013) 0.084*** (0.025) 0.054*** (0.015) Go e nmen expendi u e (pe cen o GDP) 0.005** (0.002) 0.002 (0.001) 0.007*** (0.002) 0.003** (0.001) 0.006*** (0.002) 0.003*(0.001) A e age schooling yea s 0.008 (0.009) −0.005 (0.006) 0.004 (0.008) −0.006 (0.006) 0.005 (0.009) −0.007 (0.007) Popula ion densi y, log 0.008 (0.015) 0.001 (0.010) −0.003 (0.012) −0.004 (0.008) 0.011 (0.015) 0.000 (0.009) A ea, log −0.006 (0.009) 0.000 (0.006) −0.018** (0.009) −0.006 (0.006) −0.010 (0.011) −0.003 (0.006) Colonial o igin = Du ch 0.078*(0.041) 0.011 (0.031) 0.085** (0.037) 0.022 (0.032) 0.105** (0.043) 0.023 (0.032) Colonial o igin = Spanish −0.022 (0.074) 0.022 (0.051) 0.014 (0.057) 0.028 (0.047) −0.016 (0.073) 0.022 (0.049) Colonial o igin = US 0.060 (0.049) 0.052 (0.032) 0.083** (0.041) 0.056*(0.031) 0.066 (0.056) 0.043 (0.035) Colonial o igin = B i ish −0.002 (0.045) 0.045 (0.036) 0.021 (0.044) 0.048 (0.036) −0.004 (0.049) 0.045 (0.037) Colonial o igin = F ench −0.044 (0.054) 0.019 (0.049) −0.030 (0.049) 0.016 (0.048) −0.045 (0.054) 0.018 (0.048) Colonial o igin = Po uguese −0.044 (0.097) −0.050 (0.058) −0.122 (0.083) −0.078 (0.058) −0.062 (0.100) −0.058 (0.063) Colonial o igin = Aus alian −0.161*** (0.058) 0.038 (0.050) −0.038 (0.053) 0.055 (0.047) −0.122** (0.058) 0.047 (0.046) REGION = Oceania 0.197** (0.075) 0.026 (0.051) 0.109*(0.064) 0.016 (0.049) 0.182** (0.079) 0.023 (0.050) REGION = Ame ica −0.072 (0.059) −0.065 (0.042) −0.079 (0.054) −0.069*(0.042) −0.074 (0.064) −0.068 (0.042) REGION = Asia −0.035 (0.063) 0.059 (0.043) −0.022 (0.054) 0.055 (0.042) −0.061 (0.063) 0.050 (0.042) REGION = Eu opa −0.039 (0.075) −0.046 (0.044) −0.074 (0.067) −0.056 (0.044) −0.103 (0.087) −0.071 (0.050) Cons an −0.367*(0.207) −0.186 (0.140) −0.094 (0.209) −0.089 (0.139) −0.364 (0.249) −0.160 (0.146) Obse a ions 102 100 100 100 100 100 R 2 0.716 0.885 0.797 0.895 0.728 0.890 No e: Robus s anda d e o s in pa en heses. *p< .1. **p< .05. ***p< .01. 6o 12 CAMÕES 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License TABLE 3 Decen alisa ion and quali y o go e nmen : al e na i e measu es Va iables Go e nmen E ec i eness Con ol o Co up ion Regula o y Quali y Poli ical decen alisa ion −0.030 (0.083) −0.117 (0.096) −0.061 (0.099) Fiscal decen alisa ion 0.271*** (0.102) 0.417*** (0.141) 0.191 (0.115) Adminis a i e decen alisa ion 0.204*** (0.076) 0.272** (0.105) 0.179** (0.087) E ec i e democ acy index 0.024*** (0.002) 0.022*** (0.002) 0.023*** (0.002) 0.032*** (0.002) 0.028*** (0.003) 0.031*** (0.002) 0.023*** (0.003) 0.020*** (0.003) 0.022*** (0.003) GDP pe capi a, log 0.293*** (0.078) 0.278*** (0.075) 0.298*** (0.081) 0.276*** (0.082) 0.249*** (0.077) 0.279*** (0.086) 0.206** (0.081) 0.194** (0.080) 0.209** (0.083) Go e nmen expendi u e (% o GDP) −0.002 (0.004) −0.000 (0.004) −0.001 (0.004) 0.001 (0.006) 0.004 (0.005) 0.003 (0.006) −0.016*** (0.006) −0.014*** (0.005) −0.014** (0.005) A e age schooling yea s 0.011 (0.026) 0.008 (0.024) −0.000 (0.026) −0.043 (0.027) −0.050** (0.025) −0.060** (0.028) 0.012 (0.028) 0.008 (0.027) 0.001 (0.028) Popula ion densi y, log 0.019 (0.038) −0.002 (0.035) 0.010 (0.035) −0.067 (0.040) −0.105*** (0.039) −0.085** (0.037) 0.034 (0.038) 0.016 (0.038) 0.023 (0.037) A ea, log −0.011 (0.023) −0.039 (0.024) −0.032 (0.020) −0.059** (0.026) −0.108*** (0.027) −0.094*** (0.025) −0.019 (0.027) −0.042 (0.028) −0.041 (0.027) Colonial o igin = Du ch −0.213* (0.110) −0.180* (0.106) −0.163 (0.101) −0.377*** (0.129) −0.319** (0.129) −0.303** (0.124) −0.360** (0.141) −0.333** (0.142) −0.313** (0.144) Colonial o igin = Spanish 0.125 (0.196) 0.119 (0.185) 0.113 (0.194) 0.176 (0.214) 0.160 (0.195) 0.152 (0.211) 0.149 (0.251) 0.141 (0.241) 0.135 (0.247) Colonial o igin = US 0.164 (0.117) 0.144 (0.114) 0.073 (0.111) 0.018 (0.139) −0.044 (0.131) −0.138 (0.144) −0.200 (0.153) −0.232 (0.144) −0.295** (0.138) Colonial o igin = B i ish 0.094 (0.145) 0.112 (0.139) 0.090 (0.139) 0.110 (0.169) 0.146 (0.164) 0.113 (0.169) −0.110 (0.153) −0.092 (0.153) −0.110 (0.149) Colonial o igin = F ench 0.090 (0.172) 0.092 (0.164) 0.085 (0.163) 0.156 (0.191) 0.162 (0.187) 0.153 (0.192) −0.046 (0.196) −0.043 (0.192) −0.048 (0.187) Colonial o igin = Po uguese 0.172 (0.231) 0.062 (0.243) 0.127 (0.267) 0.153 (0.206) −0.015 (0.187) 0.093 (0.214) 0.267 (0.193) 0.191 (0.184) 0.228 (0.198) Colonial o igin = Belgian 0.697*(0.363) 0.677*(0.376) 0.658*(0.364) 0.911 (0.754) 0.875 (0.775) 0.852 (0.755) 0.385 (0.288) 0.368 (0.290) 0.348 (0.281) Colonial o igin = Aus alian 0.353** (0.175) 0.409** (0.165) 0.368** (0.161) −0.428* (0.223) −0.350* (0.206) −0.418* (0.210) −0.078 (0.201) −0.043 (0.205) −0.069 (0.198) REGION = Oceania −0.191 (0.167) −0.219 (0.155) −0.191 (0.151) 0.206 (0.198) 0.158 (0.180) 0.201 (0.187) 0.153 (0.207) 0.130 (0.205) 0.150 (0.200) REGION = Ame ica −0.195 (0.150) −0.187 (0.143) −0.211 (0.145) −0.221 (0.152) −0.215 (0.134) −0.249* (0.144) −0.220 (0.183) −0.218 (0.170) −0.236 (0.176) REGION = Asia 0.216 (0.168) 0.210 (0.160) 0.185 (0.165) 0.346*(0.185) 0.344** (0.172) 0.312*(0.181) 0.092 (0.206) 0.092 (0.204) 0.068 (0.202) REGION = Eu opa −0.150 (0.163) −0.176 (0.157) −0.279* (0.161) −0.230 (0.198) −0.271 (0.181) −0.404* (0.206) 0.124 (0.200) 0.104 (0.198) 0.009 (0.202) (Con inues) CAMÕES 7o 12 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License da a on he h ee di e en ypes o decen alisa ion, bu only as c oss-sec ional measu es. 4.1 |Dependen a iable: QOG The quali y o go e nmen is complex and mul idimensional concep . La Po a e al. (1999) use he e m “good”in hei a icle o s and o good- o -economic de elopmen , ha is, good go e nmen pe o - mance. They use measu es as di e se as go e nmen in e en ion, public sec o e iciency, public good p o ision, size o go e nmen and poli ical eedom in hei analysis. The Quali y o Go e nmen Ins i- u e de eloped a speci ic de ini ion o QoG along he concep o he impa iali y o ins i u ions ha exe cise go e nmen au ho i y Ro hs ein and Teo ell (2008). Acco dingly, in Cha on and Lapuen e (2013), quali y o go e nmen is unde s ood as: (a) con ol o co up ion; (b) impa ial ea men o ci izens and (c) go e nmen e ec i eness. This way, he p ima y dependen a iable o he qual- i y o go e nmen is a composi e measu e by he In e na ional Coun- y Risk Guide which includes h ee componen s: ‘Co up ion’,‘Law and O de ’, and ‘Bu eauc acy Quali y’scaled 0–1. Fo obus ness pu - poses, I also es h ee a iables included in he da ase o he Wo ld Go e nance Indica o s eleased by he Wo ld Bank: (a) go e nmen e ec i eness; (b) con ol o co up ion and (c) egula o y quali y. 4.2 |Key independen a iables: decen alisa ion and democ acy Wi h ega d o decen alisa ion, we al eady a gued o he h ee di - e en ypes o decen alisa ion ha expec ed o p oduce somewha di e en e ec s (Mano , 1999). I use he h ee a iables de eloped by I anyna and Shah (2012), he only au ho s ha collec ed hese ypes o da a. 4.2.1 |Poli ical decen alisa ion Poli ical decen alisa ion is he ans e o powe o lowe le els o au ho i y ha a e la gely democ a ic and independen o he highe le els. I is he case when cen al go e nmen is gi ing up e ec i e au ho i y (Mano , 1999). Fo example, he c ea ion o a new le el o egional o local go e nmen ha is democ a ically elec ed cons i u es a case o poli ical decen alisa ion. In he same way, when an al eady exis ing le el o sub-na ional go e nmen has go e nance bodies ha we e p e iously appoin ed by cen al go e nmen bu a e la e demo- c a ically elec ed, he e is an inc ease in poli ical decen alisa ion. The key aspec o poli ical decen alisa ion is he inc easing in luence o powe o o ganised in e es s a lowe le els. Fo his eason, some au ho s claim his ype o decen alisa ion o be he only genuine ype o decen alisa ion. Al hough commonly used in analyses, he ede al s a us is a e y poo measu e o poli ical decen alisa ion because ed- e alism is a ca ego y o sys ems a he han a single sys em o TABLE 3 (Con inued) Va iables Go e nmen E ec i eness Con ol o Co up ion Regula o y Quali y Cons an −3.363*** (0.610) −2.911*** (0.610) −3.120*** (0.574) −2.263*** (0.577) −1.485** (0.609) −1.849*** (0.599) −1.933*** (0.681) −1.568** (0.692) −1.680** (0.665) Obse a ions 113 113 113 113 113 113 113 113 113 R 2 0.901 0.908 0.906 0.876 0.889 0.883 0.847 0.850 0.851 No e: Robus s anda d e o s in pa en heses. *p< .1. **p< .05. ***p< .01. 8o 12 CAMÕES 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License TABLE 4 Decen alisa ion and quali y o go e nmen : spa ial analysis Va iables Poli ical Decen alisa ion Fiscal Decen alisa ion Adminis a i e Decen alisa ion Decen alisa ion 0.062** (0.031) 0.009 (0.021) 0.187*** (0.026) 0.077*** (0.022) 0.082*** (0.029) 0.038** (0.019) E ec i e democ acy index 0.006*** (0.000) 0.005*** (0.001) 0.005*** (0.000) GDP pe capi a, log 0.076*** (0.016) 0.052*** (0.011) 0.057*** (0.014) 0.047*** (0.010) 0.083*** (0.016) 0.054*** (0.010) Go e nmen expendi u e (% o GDP) 0.006*** (0.002) 0.003** (0.001) 0.008*** (0.001) 0.004*** (0.001) 0.007*** (0.002) 0.003*** (0.001) A e age schooling yea s 0.007 (0.008) −0.005 (0.005) 0.002 (0.007) −0.006 (0.005) 0.004 (0.008) −0.007 (0.005) Popula ion densi y, log 0.013 (0.012) 0.003 (0.008) 0.003 (0.010) −0.000 (0.008) 0.016 (0.012) 0.003 (0.008) A ea, log 0.000 (0.008) 0.002 (0.005) −0.011 (0.007) −0.003 (0.005) −0.005 (0.008) −0.001 (0.006) Colonial o igin = Du ch 0.100 (0.117) 0.022 (0.075) 0.111 (0.098) 0.039 (0.071) 0.124 (0.115) 0.034 (0.074) Colonial o igin = Spanish 0.001 (0.066) 0.031 (0.042) 0.041 (0.055) 0.043 (0.040) 0.004 (0.065) 0.031 (0.042) Colonial o igin = I alian 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) Colonial o igin = US 0.040 (0.119) 0.043 (0.076) 0.067 (0.097) 0.049 (0.071) 0.054 (0.115) 0.038 (0.073) Colonial o igin = B i ish 0.003 (0.044) 0.046 (0.029) 0.027 (0.037) 0.050*(0.027) −0.001 (0.043) 0.046 (0.028) Colonial o igin = F ench −0.041 (0.063) 0.019 (0.040) −0.026 (0.052) 0.015 (0.038) −0.042 (0.061) 0.018 (0.040) Colonial o igin = Po uguese −0.034 (0.095) −0.045 (0.060) −0.114 (0.079) −0.076 (0.058) −0.055 (0.093) −0.054 (0.059) Colonial o igin = Belgian 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) Colonial o igin = B i ish-F ench 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) 0.000 (0.000) Colonial o igin = Aus alian −0.144 (0.143) 0.041 (0.092) −0.013 (0.120) 0.063 (0.088) −0.107 (0.141) 0.051 (0.091) REGION = Oceania 0.179*(0.096) 0.022 (0.063) 0.086 (0.081) 0.008 (0.059) 0.167*(0.095) 0.019 (0.061) REGION = Ame ica −0.081 (0.057) −0.070*(0.036) −0.089*(0.047) −0.075** (0.034) −0.081 (0.056) −0.072** (0.036) REGION = Asia −0.040 (0.049) 0.054*(0.032) −0.029 (0.040) 0.047 (0.031) −0.067 (0.048) 0.045 (0.032) REGION = Eu opa −0.005 (0.066) −0.030 (0.042) −0.038 (0.055) −0.038 (0.040) −0.075 (0.068) −0.058 (0.043) Cons an −0.440** (0.188) −0.223*(0.123) −0.178 (0.160) −0.133 (0.118) −0.436** (0.183) −0.200*(0.120) CW (quali y o go e nmen ) −0.150** (0.066) −0.066 (0.042) −0.170*** (0.055) −0.090** (0.040) −0.125*(0.064) −0.061 (0.041) Obse a ions 102 100 102 100 102 100 Obse a ions 100 100 100 100 100 100 No e: S anda d e o s in pa en heses. *p< .1. **p< .05. ***p< .01. CAMÕES 9o 12 14791854, 2022, 3, Downloaded om h ps://onlinelib a y.wiley.com/doi/10.1002/pa.2435 by Coch ane Po ugal, Wiley Online Lib a y on [22/03/2023]. See he Te ms and Condi ions (h ps://onlinelib a y.wiley.com/ e ms-and-condi ions) on Wiley Online Lib a y o ules o use; OA a icles a e go e ned by he applicable C ea i e Commons License