Decentralization in Ethiopia--Who Benefits?
This paper shows that greater autonomy to cities in Ethiopia through a process of city proclamations, led to better economic outcomes at the city level, lowering regional spatial inequalities. In addition, the newly-empowered cities did not seem to misuse their new powers by favoring particular...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/12/25658151/decentralization-ethiopia-benefits http://hdl.handle.net/10986/23574 |
| Summary: | This paper shows that greater autonomy to cities in Ethiopia through a
process of city proclamations, led to better economic outcomes at the city
level, lowering regional spatial inequalities. In addition, the newly-empowered
cities did not seem to misuse their new powers by favoring
particular firms over others. We investigate the effect of a nation-wide
introduction of VAT in Ethiopia – and show that the intended recipients of
the reform, i.e. importing firms performed better (in terms of employment and
sales) only after the VAT introduction in decentralized cities with greater
autonomy than in non-decentralized cities. This is suggestive evidence that
increasing administrative powers (or the mayor’s wedge) played an important
role in making Ethiopian cities more competitive, and allowed mayor’s to
transmit more efficiently the effect of national-level reforms. |
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