Decentralisation and economic growth: evidence from developing countries

Abstract

This article is organised into three major logical parts. The first part (subsections Fiscal Federalism and Decentralization: Origins and Essence and Public Administration and Political Science Views on Decentralization) discusses the origins of the fiscal federalism framework and the decentralisation process. This review of fiscal federalism's origins is necessary in order to establish a system of reference for analysis of decentralisation typology and process, which is the second part of this chapter (Major Elements of Decentralization and its Taxonomy). The second part of this chapter also identifies major components of the decentralisation process per se through a review of existing literature in the field. It concludes with the formulation of the first research question of this article: How can the decentralisation process properly be measured and assessed? The third and concluding part of this article (Decentralisation and Economic Growth: Summary of the Current Literature and Theories of Economic Growth) is devoted to a review of the existing literature on the relationship between a nation's degree of decentralisation and its economic performance. This section concludes with the formulation of the second research question of this article: Does fiscal decentralisation cause economic growth or is it a consequence of economic growth? The article concludes with a review of existing economic growth models.