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Fiscal Decentralization in Kenya: The Constituency Development Fund and the Growth of Government

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Bagaka, Obuya

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Abstract

This paper explores the financial implications of fiscal decentralization policies on the central government's operating budget in Kenya. The paper evaluates how devolved funds under the constituency development fund (CDF) have been utilized to start healthcare capital projects (clinics) at the local level. The study finds that fiscal decentralization has promoted allocative efficiency and equity but at a cost of exporting tax burdens (operations and maintenance) to the central government emanating from capital projects implemented at the local level. The exported tax burdens have policy implications and call for reforms of the CDF program to reflect a benefit-expenditure structure.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11813.

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Date of creation: 10 Oct 2008
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Handle: RePEc:pra:mprapa:11813

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Related research
Keywords: fiscal decentralization; budget; devolution; constituency development fund; health care; allocative efficiency;

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Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
H0 - Public Economics - - General
H7 - Public Economics - - State and Local Government; Intergovernmental Relations
H5 - Public Economics - - National Government Expenditures and Related Policies
H2 - Public Economics - - Taxation, Subsidies, and Revenue
A10 - General Economics and Teaching - - General Economics - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hood, Ron & Husband, David & Fei Yu, 2002. "Recurrent expenditure requirements of capital projects - estimation for budget purposes," Policy Research Working Paper Series 2938, The World Bank. [Downloadable!]
  2. Ernesto H. Stein, 1998. "Fiscal Decentralization and Government Size in Latin America," RES Working Papers 4112, Inter-American Development Bank, Research Department. [Downloadable!]
  3. Sharma, Chanchal Kumar, 2004. "Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes," MPRA Paper 204, University Library of Munich, Germany, revised Nov 2005. [Downloadable!]
  4. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Studies Program Working Paper Series, at AYSPS, GSU paper9901, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
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  5. Lindaman, Kara & Thurmaier, Kurt, 2002. "Beyond Efficiency and Economy: An Examination of Basic Needs and Fiscal Decentralization," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 915-34, July.
  6. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September. [Downloadable!] (restricted)
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