Publication: Does Fiscal Decentralization Result in a Better Business Climate?
Date
2012-04-30
ISSN
1350-4851
Published
2012-04-30
Author(s)
Sobel, Russell S.
Dutta, Nabamita
Roy, Sanjukta
Abstract
Previous literature generally finds that greater fiscal decentralization is associated with faster economic growth, improved government performance and stronger constraints on the Leviathan behaviour of governments. Because economic growth critically depends on the presence of good government policies and institutions, the likely but untested link between these strands of literature is that greater decentralization probably improves growth because it results in government policies more conducive to entrepreneurship and business success. We test (and confirm) this hypothesis using several business climate measures for the US states.