ated with lower corruption." I'm not going to go into the actual methodology of the paper here - it's definitely an area that needs some further study but I wanted to summarize the different theories as to why decentralization might increase or decrease corruption (from the paper):
Decrease:
- Political competition reduces the ability of bureaucrats to extract rents in exchange for services - The Power to Tax, Brennan and Buchanan (1980)
- Competition among localities will more generally discourage governments from establishing interventionist and distortionary policies that might drive away valuable factors of production - Regional Decentralization and Fiscal Incentives, Jin et. al (1999)
- Related to last point: Implement corruption free zones to force other localities to improve their own bureaucracies - Special Governance Zone: A Practical Entry-Point for a Winnable Anti-Corruption Program, Shang-Jin Wei (2000)
- Agents in centralized bureaucracy are responsible for many tasks in many jurisdictions, in decentralized bureaucracy they are responsible for a single task. This makes them more directly accountable while in centralized bureaucracy only the aggregate performance is measured - Constitutional determinants of government spending, Persson and Tabellini (2000)
Increase:
- Decentralized regimes are less likely to attract high quality bureaucrats, since the rewards to local politicians will be small relative to bureaucrats at the central level - Fiscal federalism and efficiency, Tanzi (1996).
- The post may be more prestigious, visible, and monitored better - Constitutional determinants of government spending, Persson and Tabellini (2000)
- Lack of coordination among bureaucrats in extracting bribes may lead to ‘excess’ rent extraction, in much the same manner that successive monopolies result in a total price markup above the monopoly level - Corruption, Shleifer and Vishny (1993) - [Great paper, I read this for IPS 207]
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