Decentralized Cooperation and the Future of African Regional Development: What Public Policies to Bridge the Territorial Gap?

Abstract

This paper examines whether decentralized cooperation (DC) is associated with lower territorial inequality in Africa and under what institutional conditions. We develop a conditional decentralization framework that distinguishes DC from fiscal decentralization and test it using a balanced panel of 38 African countries from 2000 to 2022. Two-way fixed-effects models are complemented by restricted two-step System GMM and spatial specifications. In the preferred fixed-effects model, a 1-percentage-point increase in DC intensity is associated with a 0.00142 decline in the regional Gini (0–1 scale), about 0.32% of the sample mean. The association becomes stronger as governance improves and is statistically distinguishable from zero above an estimated CPIA threshold of about 3.0. Spatial estimates are also consistent with positive cross-border spillovers. Robustness checks using alternative governance measures, subsamples, inequality measures, index weights, and placebo specifications support the direction of the findings. The results suggest that DC should be embedded in formal national frameworks, paired with governance safeguards and administrative capacity-building, and coordinated through cross-border municipal clusters where spillovers may arise. Because the DC proxy is based mainly on subnational official development assistance, the estimates should be read as directional rather than definitive causal magnitudes.