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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.

Suggested Citation

  • Mogues, Tewodaj & Benin, Samuel, 2012. "Do External Grants to District Governments Discourage Own Revenue Generation? A Look at Local Public Finance Dynamics in Ghana," World Development, Elsevier, vol. 40(5), pages 1054-1067.
    • Handle: RePEc:eee:wdevel:v:40:y:2012:i:5:p:1054-1067
    DOI: 10.1016/j.worlddev.2011.12.001
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