Does Size Matter? The Productivity of Government: Expenditures and the Size of States: Evidence from India

Arbeitspapier

Some politicians argue for the splitting and combining of states to increase government productivity, but there is a dearth of empirical evidence on the optimal size of a state. Using data from Indian states, I test a model of the optimal size of the state. I find that size and preference heterogeneity do not significantly affect the productivity of a state government. However, when states are split up, the productivity of the root state's government is negatively affected. This suggests that there may be a readjustment phase after state reorganisation that brings about this negative effect. It is important to consider this effect when redrawing state borders.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GIGA Working Papers ; No. 285

Classification and Topics

• Classification: Wirtschaft ; Structure, Scope, and Performance of Government ; Publicly Provided Goods: General ; National Government Expenditures and Related Policies: General ; State and Local Budget and Expenditures ; Intergovernmental Relations; Federalism; Secession
• Subject: India ; fiscal federalism ; government quality ; ethnic heterogeneity ; state reorganization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Haasnoot, Cornelis W.
• Event: Veröffentlichung
• (who): German Institute of Global and Area Studies (GIGA)
• (where): Hamburg
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/144183
• Last update: 10.03.2025, 11:44 AM CET