REDUCING REGIONAL DISPARITIES THROUGH DECENTRALIZATION

This paper deals with the relationship between decentralization and regional disparities. There are several theoretical reasons why decentralization has a positive impact on economic performance of countries and regions so reducing regional disparities. Existing empirical research has shown positive effects of decentralization on the higher level of economic output of the economy. It can be assumed that the regional disparities in countries with a high degree of fiscal and political decentralization are smaller than in countries with a lower degree of fiscal and political decentralization. A decentralization index was used to measure decentralization. This index is unique in two ways: firstly it includes both quantitative and qualitative components of decentralization and secondly it is compiled based on data obtained directly from the regions. An indicator dispersion of regional GDP per capita was used to measure regional disparities. The authors demonstrated correlation.