Expenditure decentralization and outcomes: some determinant factors for success from cross-country evidence

Abstract

This paper attempts to answer the question of whether and in what conditions assigning more expenditure responsibilities to Sub-National governments is better to achieve development goals. Using a panel data of developing and transition countries, empirical evidence show that spending by local governments has helped to foster reduction of mortality infant rates, especially in countries with high level ethnic diversity and where revenue mobilization has also been decentralized. These results confirm some theoretical predictions of the fiscal federalism literature.