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AER Study Finds That Decentralised Economies Perform Better
26.05.2009
An independent study commissioned by the Assembly of European Regions (AER) has found that giving more power to regions improves countries' economic output.
The study, entitled "From Subsidiarity to Success: The impact of decentralisation on economic growth", is the product of two years of research by a Swiss-based independent economic research institute.
Amongst the key findings of the study were observations that giving more power to regions on a national level, a greater regional independence, greater financial resources and competences for regions, and a larger role for regions in setting social policy all help to improve countries' economic performance.
The study is split into three parts:
Part 1: "Creating a Decentralisation Index", brings together quantitative and qualitative data to look at European states' administrative, functional, political, vertical and financial decentralisation. The findings were then used to create a decentralisation index, grading countries from 0 to 100. Switzerland was found to be the most decentralised European state with a score of 70, whilst Bulgaria is the most centralised European state with 25. Other results included 66 for Germany, 49 for the United Kingdom and 42 for France.
Part 2: "Decentralisation and Economic Performance" uses the decentralisation index to look at the effect decentralisation has on economic variables including GDP and innovation. Although some areas, such as academic research, appear to benefit from a greater centralisation, most findings indicated that decentralisation has a clear and positive impact on economic output.
Part 3: "Summaries and Conclusions" lays out a number of implications for policy makers, concluding that national governments should concentrate on providing services in areas with high spacial externalities or with substantial economies of scale.
The whole study is only available in English, but part 3 can also be viewed in French or German.
To download your copy, and for more information, click here.
