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Fiscal Decentralization and Economic Growth: A Cross-Country Study

  • Davoodi, Hamid
  • Zou, Heng-fu

We use a panel data set of 46 countries over the 1970¨C1989 period to investigate the relationship between fiscal decentralization and economic growth. We find a negative relationship between fiscal decentralization and growth in developing countries, but none in developed countries. Several explanations are offered for our findings.

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File URL: http://www.sciencedirect.com/science/article/pii/S0094-1190(97)92042-8
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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 43 (1998)
Issue (Month): 2 (March)
Pages: 244-257

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Handle: RePEc:eee:juecon:v:43:y:1998:i:2:p:244-257
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  1. Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
  2. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
  3. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
  4. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  5. Heng-fu Zou, 1994. "Taxes, Federal Grants, Local Public Spending, and Growth," CEMA Working Papers 78, China Economics and Management Academy, Central University of Finance and Economics.
  6. Bird, Richard & Wallich, Christine, 1993. "Fiscal decentralization and intergovernmental relations in transition economics : toward a systematic framework of analysis," Policy Research Working Paper Series 1122, The World Bank.
  7. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
  8. Heng-fu Zou, 1995. "Dynamic Effects of Federal Grants on Local Spending," CEMA Working Papers 93, China Economics and Management Academy, Central University of Finance and Economics.
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