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Fiscal Decentralization and Economic Growth

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Abstract

This paper reviews the current knowledge on an issue of increasing policy interest: what impact fiscal decentralization has on economic growth. Fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped. The absence of an adequate theoretical framework has undermined the validity of the empirical work on this subject. A fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question. Much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth, through the impact of fiscal decentralization on economic efficiency, the regional distribution of resources, and macroeconomic stability. This paper explorers the nature of these links and concludes with some thoughts and policy advice.

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File URL: http://aysps.gsu.edu/sites/default/files/documents/icepp/wp/ispwp0101.pdf
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Bibliographic Info

Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0101.

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Length: 40 pages
Date of creation: 01 Jan 2001
Date of revision:
Handle: RePEc:ays:ispwps:paper0101

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Keywords: Fiscal Decentralization; Economic Growth;

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