Governance and Management Review, Vol 1, No 1 (2016)

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Decentralization and Business-Government Relations: Evidence from Micro Data

Ummad Mazhar


Adding to the literature on the effects of government decentralization, this paper uses a large sample of individual responses from more than a hundred countries about public’s perceptions of government’s performance along various dimensions to study the relative influences of different types of decentralization, including fiscal decentralization, administrative decentralization, and aggregate decentralization. Our cross-national results show that fiscal and administrative decentralization are qualitatively alike in that greater decentralization in each case improves perceptions of the government performance. Overall decentralization is viewed somewhat differently. With regard to tax administration particularly, fiscal and administrative forms of government decentralization result in better outcomes than overall decentralization. Finally, service industries, ceteris paribus, perceived government performance differently. Compared to a representative country in the sample, Pakistan is significantly underperforming as far as the provision of good business environment is concerned. Thus, the consequences of decentralization may vary across its different types as well as depend upon countries’ peculiarities. 

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