DECENTRALIZATION AND THE QUALITY OF GOVERNMENT How does the degree of political decentralization in a country affect the quality of its government? Greater political decentralization

How does the degree of political decentralization in a country affect the quality of its government? Greater political decentralization might make governments more honest and efficient by bringing officials “closer to the people”, forcing them to compete for mobile capital, and facilitating the satisfaction of diverse local tastes. On the other hand, it might create coordination problems or roadblocks to reform and exacerbate incentives to predate and shirk on public good provision. Empirical work has been inconclusive, in part because different types of decentralization are examined. I define five types of decentralization, and outline five arguments about how specific types may affect government quality. Statistical tests, using newly collected data on up to 154 countries, suggest that states which have more tiers of goverment tend to have higher perceived corruption, and may do a worse job of providing public health services. Federal states appear less effective at providing public health services and (at least among developing countries) at lowering adult illiteracy. The Tieboutian idea that decreasing the size of government units will strengthen competition between governments for capital, thus stimulating greater efficiency and honesty, is not supported. Countries with smaller first-tier jurisdictions tended to be perceived as more corrupt.