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Do External Grants to District Governments Discourage Own Revenue Generation? A Look at Local Public Finance Dynamics in Ghana

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  • Mogues, Tewodaj
  • Benin, Samuel

Abstract

Using rich panel data on all of Ghana’s districts’ local public finances over 11 years, this paper investigates the way that intergovernmental and other transfers to local governments affect local governments’ incentives to collect internally generated revenues and funds (IGF). We find that despite an incentive scheme built into one of the major intergovernmental grants, the flow of all grants taken together discourages, rather than encourages, IGF. This is reflected both in the depressing effect of transfers on IGF levels, as well as on IGF growth.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 5 ()
Pages: 1054-1067

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:5:p:1054-1067

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: decentralization; local public finance; internally generated revenues; intergovernmental transfers; Africa; Ghana;

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Cited by:
  1. Paul Smoke, 2013. "Why Theory and Practice are Different: The Gap Between Principles and Reality in Subnational Revenue Systems," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1313, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Pierre André & Sandrine Mesplé-Somps, 2013. "Sitting on the fence: Pork-barrels and democratization under threat of conflict. The case of Ghana, 1996 - 2004," THEMA Working Papers 2013-24, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  3. Kolavalli, Shashidhara & Birner, Regina & Benin, Samuel & Horowitz, Leah & Babu, Suresh & Asenso-Okyere, Kwadwo & Thompson, Nii Moi & Poku, John, 2010. "Institutional and public expenditure review of Ghana’s Ministry of Food and Agriculture," IFPRI discussion papers 1020, International Food Policy Research Institute (IFPRI).
  4. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, vol. 46(C), pages 176-184.

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