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AEC 2008 - Expenditure Decentralisation and Outcomes: Some Determinant Factors for Success from Cross-Country Evidence

30-Nov-2008

This paper attempts to answer the question of whether and in what conditions, assigning more expenditure responsibilities to sub-national governments is better for the achievement of development goals. Using a panel data of developing and transition countries, empirical evidence shows that spending by local governments has helped to foster reduction of infant mortality rate, especially in countries with high level of ethnic diversity and where revenue mobilisation has been decentralised. These results confirm some theoretical predictions of the fiscal federalism literature.

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