Decentralised provision of quasi-private goods: The case of Colombia

This paper quantifies the welfare effects of decentralisation in Colombia, using a multiregional CGE model. We investigate to what extent the Colombian population will be better off when goods such as health and education are delivered locally as against centrally. A provision scheme based on the median voter is considered. According to the results, the provision of health and education by regional governments improves the welfare of the Colombian population as a whole; these welfare gains vary from 1.3% to 2.3% of GDP, a substantial magnitude especially when compared with the efficiency gains associated to the tax reforms of the early 1990s.