Does Decentralization Decrease State Fragility? Evidence from Developing Countries

Charly Ondobo Tsala (), Raymond Ekodo () and Henri Tabi Ngoa ()
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Charly Ondobo Tsala: University of Ngaoundéré
Raymond Ekodo: University of Ngaoundéré
Henri Tabi Ngoa: University of Yaoundé II

Journal of the Knowledge Economy, 2025, vol. 16, issue 4, No 50, 15228-15259

Abstract: Abstract This paper analyses whether and how decentralization decrease state fragility in developing countries. Fiscal autonomy index that reflects local’s autonomy decision-making is considered to measure decentralization. The empirical analysis uses the generalized method of moments (GMM) on a sample of 64 developing countries from 1995 to 2018. Our study finds that increased local government’ autonomy in decision-making positively affects the decreasing of state fragility in developing countries and substantially increase state legitimacy. The result is robust to a battery of robustness checks. Furthermore, the result of nonlinear analysis shows a U-inverted and U-shaped connection between decentralization and state fragility. The result also indicates that the fiscal “share-rule” system between central and local governments increases the likelihood of state fragility. From a policy implication, we suggest to give more political and financial autonomy to the local government in order to provide better quality of public goods and services to the citizens.

Keywords: Decentralization; State fragility; State legitimacy; State effectiveness; Panel data (search for similar items in EconPapers)
JEL-codes: C23 H7 P00 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13132-024-02400-2

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