Decentralization and Corruption: A Theoretical and Empirical Analysis of Different Transmission Channels
Table of contents
Corruption is one of the most serious problems in developing countries. The question of how to tackle corruption in developing countries is not yet answered convincingly. One repeatedly proposed solution is to implement bureaucratic or interregional competition through fiscal decentralization. Competition might strengthen the accountability of bureaucrats and, thus, reduce the ability of public officials to extract rents. However, decentralization might also have adverse effects on the level of corruption, if it strengthens local elite groups.
Goals
The aim of this project is to analyze the different transmission channels through which decentralization affects corruption. From a theoretical perspective, we distinguish between vertical and horizontal decentralization. Vertical decentralization might lead to problems of double marginalization, while the competition enhancing effect of horizontal decentralization only prevails, if certain institutional conditions (e.g. public monitoring) are satisfied. Empirical tests support this hypothesis.
Innovation
So far, most studies find a decreasing effect of decentralization on corruption. We show that decentralization can also have an increasing effect, if the institutional framework is not appropriate.
Schedule
October 1st, 2007 - December 31st, 2009
Benefits
The project contribute to a better understanding of the effects of decentralization on corruption. This is particularly important for the design of development programs.
Publications
Lessmann, C. & Markwardt, G. 2010. One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats, World Development 38(4), 631-646.
Lessmann, C. & Markwardt, G. 2010. Föderalismus und Korruption – Ist Dezentralisierung ein geeignetes Mittel zur Korruptionsbekämpfung? ifo Dresden berichtet 17(4), 43-48.
Lessmann, C. & Markwardt, G. 2010. Aid, Growth, and Devolution, World Development 40(9), 1723-1749.
Discussion papers
Lessmann, C. & Markwardt, G. 2010. Fiscal federalism and foreign transfers: Does inter-jurisdictional competition increase foreign aid effectiveness? Dresden discussion paper series in economics 10/10.
Lessmann, C. & Markwardt, C. 2010. Decentralization and Foreign Aid Effectiveness: Do Aid Modality and Federal Design Matter in Poverty Alleviation? CESifo Working Paper 3035.
Contact
Project Director
Prof. Dr. Marcel Thum
TU Dresden
Faculty of Business and Economics
Chair of Public Economics
D- 01062 Dresden
Phone: +49-(0)351-463 35453
Fax: +49-(0)351-463 37052
https://tu-dresden.de/bu/wirtschaft/vwl/fiw
Researchers
Prof. Dr. Christian Leßmann
TU Dresden
Faculty of Business and Economics
Chair of International Ecomomics
D- 01062 Dresden
https://tu-dresden.de/bu/wirtschaft/vwl/iwb
Dr. Gunther Markwardt
TU Dresden
Faculty of Business and Economics
Chair of Public Economics
D- 01062 Dresden
https://tu-dresden.de/bu/wirtschaft/vwl/fiw
The project "Decentralization and Corruption: A Theoretical and Empirical Analysis of Different Transmission Channels" was part of the "DFG-Schwerpunktprogramm 1142: Institutionelle Gestaltung föderaler Systeme: Theorie und Empirie".