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Does decentralisation reduce corruption in all institutional contexts? This cross-country comparative study finds that the impact of decentralisation on corruption varies with a country's level of press freedom – that is, according to the capacity to monitor public officials. Decentralisation seems to counteract corruption in countries with high degrees of press freedom, but can increase corruption in countries with little press freedom. A free press is therefore a necessary precondition for successful decentralisation programmes.

Most empirical studies have found lower corruption in decentralised countries. However, analysis suggests that the positive impact of decentralisation on the absence of corruption in almost all earlier studies is very sensitive to how decentralisation and corruption are measured, and to the particular countries studied. The earlier studies do not consider the weak institutional structure of developing countries, such as the low degree of press freedom, which hampers the public monitoring of bureaucrats.

Using press freedom as an indicator for the effective monitoring of bureaucrats, this study reinvestigates the relationship between decentralisation and corruption. It finds that decentralisation's positive effects on corruption occur only where there is comprehensive public monitoring:

• The effect of decentralisation on the absence of corruption is in general positive
• However, it is strongly negative in countries with the lowest degree of press freedom
• In countries with a 'middle' degree of press freedom, decentralisation is found to have no effect on corruption.

Decentralisation is a feasible instrument by which to reduce corruption if bureaucrats are effectively monitored. The benefits of inter-jurisdictional competition only occur if there is a supervisory body, such as a free press. Where supervisory institutions are inadequate, decentralisation can contribute to high corruption levels.

This research has also been published in World Development: Lessmann, C. and Markwardt, G., 2010, 'One Size Fits All? Decentralization, Corruption, and the Monitoring of Bureaucrats', World Development, vol. 38, no. 4, pp.631-646