An Analysis of the Influence of Decentralization on Levels of Socio-Economic Development
Keywords:
Decentralization, economic development, social developmentAbstract
In theory, decentralization is more responsive to socio-economic needs of citizens in the locality than centralization. The current study aimed to examine the influence of decentralization on socio-economic development. The authors collected secondary data of a purposively-selected sample of 70 countries across the globe. Independent variables were political, fiscal, and administrative decentralization indices. Dependent variables included human development index, education index, health index, income inequality index, foreign direct investment, and GDP per capital. Descriptive statistics and simple regressions were employed.
Descriptive statistics reveal that the sample countries are heterogeneous in terms of decentralization and socio-economic development levels. Findings from regression analysis indicate that each of the three types of decentralization has positive influence on levels of human development, education, healthcare, and living standard. Only administrative decentralization has an inverse relationship with income inequality. The analysis does not find any significant relationship between decentralization and foreign direct investment. The findings imply that decentralization is an effective approach conductive to some aspects of socio-economic development. However, it may not be as effective for the promotion of income equality and foreign investment.
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