We study shifts in support for fiscal decentralization in a political agency model from the perspective of a region. In a model where corruption opportunities are lowet under centralization ar each period of time, decentralization makes easier for citizens to detect corrupt incumbents. As a consequence, the relationship between fiscal decentralization and corruption is conditional to the levels of political competition. When we endogenize the quality of local politicians, we establish conditions for a positive link between the development of the private sector and the support for decentralization. Since political support to the centralization evolves over time, driven by either economic/political development or by exogenous changes in the preferences over public good compsumption, it is possible that voters are (rationally) discontent about the level of fiscal autonomy. Also, we show how the preferences of the voters and politicians about fiscal decentralization can diverge in situations where political competition is weak.
H11, D72, D73, P16
Support for decentralization, quality of politicians and development
KeywordsDecentralization, centralization, political agency, quality of politicians, corruption