AER STUDY PRESENTATION: From Subsidiarity to Success: The impact of decentralisation on economic growth in Europe

On 18 May 2009, 16h00 -18h00 the AER presented to its members,representatives of the European institutions and other stakeholders its study on decentralisation and economic growth at the regional representation of Lazio in Brussels. 

In 2007 the AER commissioned the independent Swiss research institute BAK Basel economics to conduct a study in order to explore how administrative, functional, political, vertical and financial decentralisation can, given the right balance, create conditions for better economic performance.

The study consists of two parts.

“Part 1: Creating a Decentralisation Index” marks the first combined qualitative and quantitative analysis of decentralisation indicators ever conducted. The study brought together quantitative data gathered from existing sources – such as the OECD, the IMF and Eurostat – with qualitative data based on the results of 88 questionnaires completed by regions from 26 European countries. Based on this data, a “Decentralisation Index” was created which indicates the degree of decentralisation of a country/region on a scale from 0 to 100. Switzerland, for example, is the most decentralised European country with a value of 70, while Bulgaria is the most centralised, with an index of 25.

“Part 2: Decentralisation and Economic Performance” analyzes the impact that decentralisation has upon economic performance, according to indicators such as GDP, taxation levels, regulation of product and labour markets, patents granted and industry structure. The study proves that decentralisation can indeed significantly boost some economic performance indicators, with some exceptions. Academic publications, for example, thrive more in centralised structures due to economies of scale (since quality universities are very costly to run).