Decentralization in Ethiopia--Who Benefits?

Chaurey, Ritam ; Mukim, Megha

World Bank, Washington, DC

关键词: TAX INCENTIVES;    TARIFFS;    SUB-NATIONAL;    EQUITY;    TRANSACTION;   

RP-ID  :  101709

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper shows that greater autonomy to cities in Ethiopia through aprocess of city proclamations, led to better economic outcomes at the citylevel, lowering regional spatial inequalities. In addition, the newly-empoweredcities did not seem to misuse their new powers by favoringparticular firms over others. We investigate the effect of a nation-wideintroduction of VAT in Ethiopia – and show that the intended recipients ofthe reform, i.e. importing firms performed better (in terms of employment andsales) only after the VAT introduction in decentralized cities with greaterautonomy than in non-decentralized cities. This is suggestive evidence thatincreasing administrative powers (or the mayor’s wedge) played an importantrole in making Ethiopian cities more competitive, and allowed mayor’s totransmit more efficiently the effect of national-level reforms.