An Examination of the Impacts of Fiscal Decentralization on Economic Growth

Abstract

Fiscal decentralization is said to offer a number of benefits for public sector governance, including growth, accountability and responsiveness of government officials to local demands and needs. However, there has been debate about the effects of fiscal decentralization on macroeconomic performance and growth. In this paper, we examine both sides of the arguments and posit that while there are many benefits to be gained from fiscal decentralization, its impacts on economic growth is constrained by a number of factors that are based on the contexts of the societies/economies involved. Hence the positive impact of fiscal decentralization on growth depends on the context and the society/economy.