One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The majority of theoretical and empirical studies on the relationship between decentralization and corruption argues that the devolution of power might be a feasible instrument to keep corruption at bay. We argue that this result crucially depends on the effectiveness of monitoring bureaucrat's behavior. The benefits of interjurisdictional competition only occur if there is a supervisory body such as a free press, which is often lacking in less-developed countries. Using cross-country data, we analyze the relationship between decentralization and corruption taking different degrees of the freedom of the press into account. Our main finding is that decentralization counteracts corruption in countries with high degrees of press freedom, whereas countries without effective monitoring suffer from decentralization. Our policy implication is that a free press is a necessary pre-condition for successful decentralization programs. Terms of use: Documents inJEL Code: D73, H77, O23.

The impact of democracy and press freedom on corruption: Conditionality matters

“…Lessmann and Markwardt (2010) study the effect of decentralization on corruption, which depends on the monitoring possibilities of bureaucrats (as reflected by the degree of press freedom). However, both studies do not consider the level of democracy.…”

“…Treisman (2000), Chowdhury (2004), Brunetti and Weder (2003)]. However, recent studies on the causes of corruption have demonstrated that the estimation of unconditional effects may lead to misleading policy conclusions, since the corruption alleviating effect of single corruption determinants may depend on others [see Saha et al (2009) and Lessmann and Markwardt (2010)]. We argue based on the theoretical literature that both instruments -democratic elections and press freedom -are complements rather than substitutes in reducing corruption.…”

Regional Inequality and Decentralization: An Empirical Analysis

“…Standard instruments for decentralization as used in the literature are the size of a country or the degree of ethnolinguistic fractionalization [see e.g. Wasylenko (1987), Arikan (2004), or Lessmann and Markwardt (2010)]. However, these instruments are not applicable in my context since they are linked to regional inequality through other channels than decentralization.…”

Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?

“…In this way, corruption is held constant and considered a country feature that only changes very gradually over time, and instead we focus on 26 Indeed, Treisman (2000) provides robust evidence that federal states are more corrupt. 27 Focusing on a broad cross-section of 64 countries over the period 1980-2000, Lessmann and Markwardt (2010) provide evidence that a free press is necessary for fiscal decentralization to reduce the extent of corruption.…”