Centralization, Elite Capture, and Service Provision: Evidence from Taiwan

• In Event: Political Institution and Taiwan's Democracy

Abstract

Decentralization is often advocated as an effective policy tool to improve public service delivery and quality of governance in the developing world. However, theorized promises of decentralization may not always be realized due to the presence of local elite capture. Does decentralization still help promote service provision in the context where elite capture is prevalent? To answer this question, I leverage a within-country institutional change in Taiwan, where townships affected by the 2010 municipal reform went through a sharp decline in the degree of decentralization in multiple dimensions. Utilizing a difference-in-differences strategy, the main results show that recentralization, on average, decreases public goods provision by roughly 40% of a within-township standard deviation. However, in contrast with some existing findings in the literature, I do not find strong evidence that a more centralized system improves service provision especially in areas where elite capture problem prior to the reform was serious. Overall, this article makes contributions to the literature on decentralization and elite capture as well as policy debates on local institutional choice.

Author

• Hsu Yumin Wang, Emory University