In recent years, a larger number of countries around the world are reconsidering the roles of various levels of government and its relationship with the civil society in order to make government more accountable and serve their people better than before. These kinds of thoughts lead to a strong trend toward decentralization of governance and of raising spending and revenue responsibility to sub-national governments.
Basically, decentralization can be defined as the transfer of part of the powers of the central government to sub-national governments and the main objective of government decentralization is to make the democratic governance, greater efficiency, and greater accountability possible. With the rising interest and positive attitude toward decentralization, one question can be raised as to the following.
"Does decentralization really brings good results, that is, does it bring good governance and in turn less corruption?"
A lot of studies have tried to answer this question, but most of them are theoretical studies, and a few of them tried the empirical studies with a few limits: limits on the measurement methods.
This study tried to find out the answer to the above quest ion with the empirical method. Considering the easiness of quantification, the degree of fiscal decentralization is used. To measure the degree of fiscal decentralization, using the dataset for 1995-2001, both the conventional method which means the sub-national share of total government spending, and the new method devised by OECD and Dr. Stegarescu which tries to capture the real autonomy of sub-national government focusing on its own tax and decision power on tax rate and base are used together to strengthen the empirical aspect.
Also, in case of corruption, the corrupt ion percept ion index provided by Transparency International is used. In addition, considering the limits the cross-country study can have because it can't control each country's own cultural and social characteristic, the within-country study, that is, Korea-based study is included. It is based on 16 city governments in Korea using the degree of fiscal autonomy published by Korea National Statistical Office and Clean Wave (Corrupt ion Impact Assessment).
Results suggested that the more the country is decentralized, the less corruption it has. Whether it is based on the cross-country study or the within-country study, it showed the same results supporting the results of the previous pro-decentralization studies and decentralization is positively related with less corruption. It implies that if the government has more decentralized system, then it will be the strong mechanism making the public official more accountable and transparent. Considering the short time span and limited dataset, it will be less statistically convincing, but it will be a toehold and useful research for the further study