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Fiscal decentralization for poverty reduction in Asia: opportunities, challenges and policy issues

Author

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  • Muhammad Hussain Malik

    (Economic Affairs Officer, Economic and Social Commission for Asia and the Pacific, Bangkok)

Abstract

The increasing popularity of decentralization has been due to political imperatives and the economic rationale of improving the efficiency of the allocation of resources and the responsiveness of policymaking to local needs and preferences. There are various forms of decentralization, but this paper is focused mainly on fiscal decentralization. The paper analyses the challenges and policy issues of decentralization with respect to experiences of countries in Asia. It examines the benefits and advantages of decentralization, as well as the various costs. The financial and human resources costs can be quite large, especially in the early phases of decentralization. It is essential to conduct a careful cost-benefit evaluation before making a decision on the process of fiscal decentralization. The paper concludes with some suggestions for measures and policy options that could maximize the benefits and minimize the risks of the fiscal decentralization process and make it conducive to poverty reduction.

Suggested Citation

  • Muhammad Hussain Malik, 2008. "Fiscal decentralization for poverty reduction in Asia: opportunities, challenges and policy issues," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 15(2), pages 13-33, December.
    • Handle: RePEc:unt:jnapdj:v:15:y:2008:i:2:p:13-33
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    File URL: http://www.unescap.org/pdd/publications/apdj_15_2/3_Malik.pdf
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    References listed on IDEAS

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    1. Mr. Ehtisham Ahmad & Li Keping & Mr. Raju J Singh & Mr. Thomas J Richardson, 2002. "Recentralization in China?," IMF Working Papers 2002/168, International Monetary Fund.
    2. World Bank, 2005. "East Asia Decentralizes : Making Local Government Work," World Bank Publications - Books, The World Bank Group, number 7492, December.
    3. Shah, Anwar & Thompson, Theresa, 2004. "Implementing decentralized local governance: a treacherous road with potholes, detours, and road closures," Policy Research Working Paper Series 3353, The World Bank.
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    Cited by:

    1. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    2. Sehrish Shahzad & Bushra Yasmin, 2016. "Does Fiscal Decentralisation Matter for Poverty and Income Inequality in Pakistan?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 781-802.
    3. Fakhry El Feky & Nadia El Nemr & Sarah Mousa, 2023. "The Theoretical Impact of Fiscal Decentralisation on National Income Inequality: Does Quality of Governance Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 71-84, November.

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