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Transcript of Bruxelles Presentation
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7/31/2019 Bruxelles Presentation
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id832
Decentralisation
From Subsidiarity to Success
AER Press conference
Bruxelles, May 18th, 2009
Prof. Dr. Urs Mller
Director BAKBASEL
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Content
Aim of the project:Look for links between the degree of autonomy or decentralisation within a
jurisdiction (territory, e.g. country or region over which legal or other
authority extends) and the jurisdictions economic development.
1. How do we measure decentralisation?
2. What is the impact of decentralisation on economic performance?
3. What is the impact of decentralisation on innovation?
4. What have we learned?
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The Decentralisation Index Family
Source: BAKBASEL
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Qualitative vs. Quantitative
CH
D
B-BC
B-DG
E
A
I-FNL
CZ
I-L
UK
PL
S-VG
S-VN
FIN
H
RO
P
F
DK
IRL
NO
HR
SK
LT
LV
GR
ESTBG
10
20
30
40
50
60
70
80
90
20 25 30 35 40 45 50 55 60 65 70
Qualitative Decentralisation Index
Quantitative Decentralisation (Index)
45
Source: BAKBASEL
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Implementing vs. Decision making
CH
D
B-BC, B-DG
E
A
I-F
NL
CZ
I-LUK
PL
S-VG
S-VN
FIN
H
RO
P
F
DK
IRL
NO
HR LT
LV
GR
EST
BG
10
20
30
40
50
60
70
80
90
100
10 15 20 25 30 35 40 45 50 55 60
decision making power (Index)
implementing power (Index)
45
Source: BAKBASEL
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An example: Bulgaria vs. Switzerland
Blgarija
SchweizSuisseSvizzera
Source: BAKBASEL
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2. What is the impact of decentralisation on economic
performance?
Why should there be an impact?
Two transmission channels
Effectiveness:
Lower tiers are better able to do the right things.
Efficiency:
Lower tiers are better able to do the things right.
This will result in higher welfare.
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Trade off between centralisation and decentralisation
relevant / highnone / loweconomies of scale
substantialnegligiblespatial externalities
homogeneousheterogeneouspreferences (spatial)
centraldecentral
power and competences
indicators for de-/centralisation
Source: BAKBASEL
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Decentralisation and GDP per capita
Source: BAKBASEL
NZ
CA
RO
LVLT HR
EST
BG
US
UK
SK
S-VN
S-VG
PL
PT-MPT-N
NL
NO
IR
I-L
I-F
H
GR
FIN-EP
FIN-A
F
E
DK
D
CZ
CH
BEL
AT
0
5
10
15
20
25
30
35
40
5 15 25 35 45 55 65 75
Decentralisation Index
GDP per capita (average 2001-2006)
(US$ at constant 2000 prices and exchange rates, PPP
corrected)
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Decentralisation and GDP growth
Source: BAKBASEL
NZ
AT
BEL
CH
CZ
D
DK
E
F
FIN-A
FIN-EP
GR
H
I-F
I-L
IR
NO
NL
PT-N
PT-M
PLS-VG
S-VN
SK
UKUS
BG
EST
HR
LT
LV
RO
CA
-2%
0%
2%
4%
6%
8%
10%
5 15 25 35 45 55 65 75
Decentralisation Index
real GDP grow th in % p.a. (2001-2006)
(US$ at constant 2000 prices and exchange rates, PPP
corrected)
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Regression results for GDP growth
Source: BAKBASEL
**, *** respectively means statistical significance on the 5 and 1 percent error level.
0.00283 **
0.00272 ***
0.00122 **
0.00102 ***
0.00196 **
0.00182 ***
country data set
regional data set
QualitativeDecentralisation
QuantitativeDecentralisation
TotalDependent variable:GDP growth(average 2001 to 2006)
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Which parts of decentralisation are of special relevance?
Qualitative decentralisation (primarily competences) is at least as relevantas quantitative decentralisation (primarily money)
Relevant is to have the decision making power, not the task of
implementation
Most relevant single aspects:- strong regional impact on the national legislation process
- the presence of a regional constitution
- high independence from the national authorities
Most relevant policy fields (decision making power):- Infrastructure
- Recreation & Culture
- Education & Research
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3. What is the impact of decentralisation on economic
innovation?
Innovation is the application of ideas and/or knowledge to increaseproductivity.
relevant / highnone / loweconomies of scale
substantialnegligiblespatial externalities
homogeneousheterogeneouspreferences (spatial)
centraldecentral
power and competences
indicators for de-/centralisation
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Why should there be an impact?
Two transmission channels
1. Effectiveness
2. Efficiency
Two competing ideas
1. Concentration
2. Specialisation
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Decentralisation vs. Patents
Source: BAKBASEL
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0 10 20 30 40 50 60 70 80
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Decentralisation vs. Shanghai
Source: BAKBASEL
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0 10 20 30 40 50 60 70 80
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Decentralisation vs. Publications
Source: BAKBASEL
0
1
2
3
4
5
6
7
8
0 10 20 30 40 50 60 70 80
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Regression results for innovation
Source: BAKBASEL
Regional data set
*, **, *** respectively means statistical significance on the 10, 5 and 1 percent error level.
0.00084 ***
0.00013 **
-0.01125***
0.00086 ***
0.00006
-0.01116 **
0.00111 ***
0.00012 *
-0.01464 ***
Patent density
Shanghai score density
Publication density
QualitativeDecentralisation
QuantitativeDecentralisation
TotalDependent variable:
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Interpretation
Decentralisation matters
There is a strong positive impact of decentralisation on patents
(specialisation for applied research)
There is a strong negative impact of decentralisation on publications
(concentration for theoretical research)
There is a weak positive impact of decentralisation on the quality of
universities (primarily from quantitative decentralisation)
The most relevant aspect is financial decentralisation
The most relevant policy field is Education & Research
Decentralised regions have a higher innovation capacity
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4. What have we learned? Summary results
+++
+
---
Patent density
Shanghai score points density
Publication density
+++
+++
+++
++
GDP per capita
GDP growth
Regional data set (234)Country data set (33)
+, ++, +++ respectively means positive statistical significance on the 10, 5, 1 percent error level.
--- means negative statistical significance on the 1 percent error level.
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4. What have we learned?
Do regions with more competences develop better than others?Are countries with a higher degree of decentralisation economically moresuccessful than centrally governed countries?The answer is YES.
Theory: Decentralisation increases both efficiency and effectiveness.
Empirical results: Decentralisation increases economic performance(both GDP per capita and GDP growth).
Decentralisation also increases the quality of universities and the research
output of applied research (which is essential for long term growth).
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Political conclusions
Regions with more competences develop better than others.
Countries with a higher degree of decentralisation are economically more
successful than centrally governed countries.
Giving more competences to sub-national tiers fosters the economy.
Most relevant aspects for the regions:
- More influence of the regions on the national level
- More independence of the regions from the national level
- More financial competences and resources for the regions
- More competences in (1) recreation and culture, (2) infrastructure,
(3) education and research, and (4) health care.
The application of the subsidiarity principle is a key to economic success.
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Sources
All information is drawn from a study commissioned by the Assembly of
European Regions and researched and produced by BAK Basel Economics
The underlying data are drawn from:
Performance data: International Benchmarking Database by BAKBASEL
Location factors: International Benchmarking Database by BAKBASEL
Decentralisation data:
Qualitative data: Survey conducted in this study commissioned by AER
Quantitative data: From various international statistical sources