Economic globalization and decentralization : a centrifugal or centripetal relationship?

One of the most significant economic trends in the last decades has been the integration of countries in international markets. What have been the consequences of global economic integration upon the territorial organization of the states? Has it contributed to centralize powers or to further decentralization? The literature so far has provided inconclusive evidence. In this paper we shed new light on the relationship between economic globalization and territorial politics by using a varied source of data such as the Regional Authority Index, and the KOF indices of globalization for the period 1970-2010. Results show that economic globalization is positively associated to decentralization, particularly in those countries with more regionalist parties and where levels of inequality are lower. Conversely, higher levels of regional inequality can revert the effect.