Abstract
This study empirically analyzes the impact of fiscal decentralization on public sector performance, focusing on national competitiveness and government efficiency. It also explores whether the effects of fiscal decentralization on public sector performance differ based on the income level of countries. This study uses a panel dataset of 25 OECD member countries, covering the period from 2001-2020. The results show that fiscal decentralization improves national competitiveness and government efficiency. Moreover, the impact of revenue decentralization on public sector performance is larger than expenditure decentralization. Finally, the impact of fiscal decentralization on national competitiveness and government efficiency varies depending on the national income level. It is also found that the impact of fiscal decentralization on public sector performance is insignificant among 13 countries with a GDP per capita of less than $40,000.
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