Decentralization in Theory and Practice: A Comprehensive Review

Kshitiz Shrestha and Charles Hankla
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Kshitiz Shrestha: International Center for Public Policy, Georgia State University
Charles Hankla: International Center for Public Policy, Georgia State University Author-Workplace-Email: chankla@gsu.edu

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: Fiscal decentralization (FD) has become a cornerstone of governance reform globally, transferring authority from central to subnational governments. This comprehensive review synthesizes theoretical frameworks and empirical evidence on FD, examining its core pillars (expenditure assignment, revenue autonomy, transfers, borrowing) and diverse impacts. While FD holds potential for improving service delivery, accountability, and economic efficiency, outcomes vary significantly. The paper analyzes FD's complex effects on economic growth, poverty, inequality, regional disparities, environmental governance, macroeconomic stability, crisis response (including COVID-19), corruption, party systems, and secession risks. It underscores that FD's success is highly context-dependent, requiring robust institutions, political coherence, and careful design tailored to a country's history, capacity, and objectives. No single model fits all contexts.

Pages: 55 pages
Date: 2025-07
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Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper2511

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