This project studies patterns of decentralisation and public finance in 68 countries in 1996. Six indicators of decentralisation clustered around fiscal, administrative, and political dimensions, and these dimensions had independent and surprising relationships with how much governments taxed and what they did with their money. First, politically decentralised regimes taxed less overall and spent less on social policies. Second, administrative decentralisation showed a positive impact on social policies, but neither administrative nor fiscal decentralisation had a systematic relationship to tax capacity. These results suggest that multi-level governance might best be pursued in a partial fashion. Political centralisation favours the actors and interests who seek large amounts of progressive public action; administrative decentralisation allows competition, information, and innovation to lead to efficient and effective public policies.
Together, political centralisation and administrative decentralisation may offer the optimal combination to achieve large quantities of effective, efficient, and redistributive public action. Fiscal decentralisation had no statistical impact in any of the models.