Are Decentralized Regions Ruled Better? Evidence from European Regions Using a Dose-Response Approach

This paper investigates the relationship between regional autonomy and the quality of governments in 171 European regions. We employ a novel dose-response approach that allows us to identify the distribution of the effect of decentralization on quality of governments. We find that the relationship between the level of decentralization and the quality of regional governments is not monotonic, but it has a u-shaped form. Both low autonomous regions and high autonomous regions exhibit higher levels of the quality of their governments. Policy recommendations based on the view that ‘more decentralization is better' should therefore be disregarded. We also find evidence of horizontal competition, in that the quality of regional governments depends also on the quality of neighbours' governments; this effect is amplified in decentralized countries