Fiscal Decentralization Policy Research Articles

Exploring the nexus between fiscal decentralization and energy poverty for China: Does country risk matter for energy poverty reduction?

Interpreting energy poverty in respect of lack of accessibility, availability, and affordability of energy resources, this study aims to explore the macroeconomic determinants of multidimensional energy poverty in China over the 2005Q1-2019Q4 period. Three weighted and one unweighted energy poverty indices are constructed to measure the incidence of energy poverty in China using relevant energy-related indicators that capture the accessibility, availability, and affordability dimensions of energy poverty. The overall results indicate that a 1% rise in the degrees of fiscal decentralization and country risks aggravates the energy poverty situation in the long run by reducing the energy poverty indices at most by 0.05% and 0.03%, respectively. In contrast, positive shocks to the levels of economic growth, renewable energy share, and technological innovation by 1% are evidenced to be associated with declines in the energy poverty indices in the long run at most by 0.43%, 0.18%, and 0.06%, respectively. Besides, the marginal impacts of these variables are seen to be comparatively larger for the composite energy poverty indices that emphasize more on the accessibility dimension of energy poverty in China. Based on these findings, greening the fiscal decentralization policies, lowering country risks, promoting economic growth, stimulating higher renewable energy use, and financing technological innovation are recommended for mitigating the incidence of energy poverty in China. These policies are also expected to assist China in partially achieving the Sustainable Development Goals agenda of the United Nations and enable the nation to attain its 2060 carbon neutrality target.

The impact of fiscal decentralization, green energy, and economic policy uncertainty on sustainable environment: a new perspective from ecological footprint in five OECD countries.

The paper explores the short-run and long-run asymmetric impact of fiscal decentralization, green energy, and economic policy uncertainty on environmental sustainability proxied by ecological footprint. Using the Nonlinear Autoregressive Distributed lag (NARDL) approach in selected five OECD countries, we find that ecological footprint responds to positive and negative fiscal decentralization asymmetrically in the long run and short run. However, the nature of the response varies significantly across countries. The result also suggests that green energy is a major factor in reducing the ecological footprint in all countries except Canada. Finally, economic policy uncertainty plays a negative and significant role in the ecological footprint in the UK, USA, and Germany while insignificant in Australia and Canada. Implications for effective environmental policies are discussed.

Fiscal decentralization and poverty alleviation: A case study of Pakistan

AbstractAccording to the World Bank, the COVID‐19 pandemic is going to exacerbate the situation of poverty. It predicts that the poverty rate could rise by 0.3 to 0.7 percentage points, to around 9% in 2020. This study aims at providing insights into poverty in Pakistan and analyzes the impact of fiscal decentralization on poverty alleviation. According to the Asian Development Bank, Pakistan houses roughly 210 million poor people. This study follows the data between 1975 and 2018, applying a unit root test to station this data. The statistical models are developed with a view to the autoregressive distributed lag co‐integration technique for estimation. The findings of the study conclude that fiscal decentralization has a direct and indirect impact in eradicating poverty. We thus conclude that the government should provide autonomy to the provinces in Pakistan, as the central government alone cannot tackle and understand the local problems. Therefore, the government must adopt a fiscal decentralization policy. This study further suggests that the government should effectively utilize the progressive taxation strategy to maximize revenues and cater to poverty alleviation.

The Impact of Fiscal Decentralization Policy on the Sustainability of Regional Development

Fiscal decentralization is a critical component of the concept of regional autonomy that has been embraced since the Reform period. With fiscal decentralization, it is envisioned that every regional government can impose development in its territory. However, the fiscal decentralization strategy in the field cannot be applied in all areas owing to political concerns. Then, each local authority has had solid financial potential since 2001 since it got very high transfer funds from the central government, but the allowance for growth was minimal. E.g., there are still many roads that are destroyed. This may be attributed to the fact that much of the transfer funds from the central government are reserved towards staff spending. The purpose of this analysis is to provide a general overview of the impact on the stabilization of regional growth of the fiscal decentralization policy in effect since 2001. For literature review, this study uses a qualitative approach. The study shows, however, that the fiscal decentralization policy has not affected all growth sectors because much of the Central Government allocation funds continue to be used for regular spending and salary payments such that capital expenditure funding, including infrastructure development funding, is modest and even budget-free.

Does exports diversification and environmental innovation achieve carbon neutrality target of OECD economies?

Achieving carbon neutrality is of great importance to many developed and developing countries around the globe. Global warming is one of the leading issues caused by human activities. To cope with environmental challenges, and to achieve carbon neutrality, fiscal decentralization and eco-innovation are promising strategies that can also enable countries and local governments to pursue visible economic growth. This study investigates the role of export diversification, environment-related technological innovation, and fiscal decentralization in effectively achieving carbon neutrality target for 37 OECD (Organization for Economic Cooperation and Development) economies from 1970 to 2019. For empirical analysis, it uses second-generation tests that deal with heterogeneity and cross-sectional dependence issues. To this end, this study employs updated cointegration techniques. The augmented mean group (AMG) approach is used to examine the long-run dynamic equilibrium among the variables of interest. The findings indicate that export diversification and fiscal decentralization followed by GDP growth affect carbon dioxide emission positively. While renewable energy consumption and environment-related technological innovation assure environmental improvement. Additionally, short-run causal and unidirectional links are found running from fiscal decentralization, export diversification, and environment-related technological innovation to carbon emissions. Our findings suggest that OECD partner countries need to be careful while devising fiscal decentralization and export diversification policies. They should increase the share of renewable energy, and expand environment-related technological innovation. Such strategic efforts would direct the OECD countries to meet the climate change mitigation agenda of sustainable development goals.

Analisis Pengaruh Alokasi DAK Masing-Masing Bidang Terhadap Tingkat Kemiskinan di Kabupaten Pandeglang dan Kabupaten Lebak

Fiscal decentralization is one of the government’s strategies to improve people’s welfare. The fiscal decentralization policy instrument that can directly affect the quality of local government spending is The Specific Allocation Fund (DAK). The DAK management in the financial aspect has a few problems, nonoptimal regional government performance and mismatched allocation and government needs. Proposal based The Specific Allocation Fund (DAK) hopefully could adjust the development priorities determined by regional conditions, government needs, and undeveloped villages with high-level poverty. Pandeglang and Lebak Regency are the region with the highest poverty level in Banten Province. This study aims to analyze the DAK effect of each sector on poverty in Pandeglang and Lebak Regency. The analysis used Geographical Weighted Regression (GWR) with DAK data for each field in 2018 and poverty data in 2019. The result showed that DAK variables in education, health, and agriculture tended not to reduce poverty rates. The DAK variable in the housing and settlement sector, the marine and fisheries sector, the tourism sector, and the market sector tended to reduce poverty. At the same time, the DAK variable in Road, sanitation, and village funds tended to reduce poverty levels in most districts. Based on the study, the poverty alleviation program in each district is adjusted to each of the DAK sectors that are influential. However, the result indicated that the adjustment of DAK sectors influenced the poverty alleviation program in every district in Pandeglang and Lebak Regency.

DESENTRALISASI DAN EFISIENSI BELANJA FUNGSI PENDIDIKAN SERTA IMPLIKASINYA TERHADAP KESEJAHTERAAN MASYARAKAT DI PROPINSI SULAWESI SELATAN

This study aims to analyze: (i) the level of efficiency of regional spending of educational functions; (ii) the impact of fiscal decentralization on the spending efficiency; and (iii) the implications of education spending efficiency on the level of welfare in the region. The research used quantitative approach with Data Envelopment Analysis (DEA) and Dinamic Generalized Method of Moment (DGMM) analysis techniques. The results showed that the realization and utilization of education function spending in the aggregate in South Sulawesi Province is quite good, although the spending is still more allocated to government bureaucracy spending. However, the results of efficiency testing by DEA method show that in most districts/cities in South Sulawesi Province, the realization and utilization of such spending is relatively less efficient. From the results of Dynamic Panel Data Testing (DGMM), the findings were obtained that fiscal decentralization in the form of Local Own-Source Revenue had a positive and significant impact on the education spending efficiency, while the fiscal decentralization policy in the form of Balance Fund, negatively influential but insignificant. In terms of good governance, the variable interaction between fiscal decentralization in the form of Local Own-Source Revenue and opinion from BPK on LKPD in districts/cities negatively and significantly affects the efficiency of education spending. While the variable interaction between fiscal decentralization both in the form of Balance Fund and opinion from BPK on LKPD in districts/cities has a positive and significant effect on the efficiency of education spending. The increase in the efficiency of education spending will be significantly followed by the improvement of the welfare of the community. Meanwhile, fiscal decentralization policy in the form of Local Own-Source Revenue has a positive and significant effect.

THE EFFECT OF CONSUMPTION AND THE LABOUR FORCE PARTICIPATION RATE (LFPR) ON ECONOMIC GROWTH IN NORTH SUMATERA PROVINCE

North Sumatera Provincial Government in implementing regional autonomy and fiscal decentralization policies has tried to implement it based on the needs of each district/city so that a prosperous society is created. The prosperity achieved is not only reflected in high economic growth but is also supported by the fulfillment of realizable consumption needs and the abundant availability of reliable human resources. This study discusses the effect of two variables contained in fiscal decentralization, the level of public consumption and labor absorption on economic growth in North Sumatra. The method used by researchers is regression using panel data (pooled data) or called the panel data regression model. The estimation results show the regression coefficient of the CONS variable is -0.185883. This means that with each increase in CONS by 1 percent, economic growth will decrease by 0.18 percent and vice versa. The effect of the CONS variable on EG is negative and significant at the 95 percent confidence level and the estimation results show the regression coefficient of the Labour Force Participation Rate (LFPR) variable of 0.442641. This means that for each increase in LFPR by 1 percent, economic growth will increase by 0.44 percent and vice versa. The effect of the LFPR variable on PE is significant at the 95 percent confidence level.

THE EFFECT OF CONSUMPTION AND THE LABOUR FORCE PARTICIPATION RATE (LFPR) ON ECONOMIC GROWTH IN NORTH SUMATERA PROVINCE

North Sumatera Provincial Government in implementing regional autonomy and fiscal decentralization policies has tried to implement it based on the needs of each district/city so that a prosperous society is created. The prosperity achieved is not only reflected in high economic growth but is also supported by the fulfillment of realizable consumption needs and the abundant availability of reliable human resources. This study discusses the effect of two variables contained in fiscal decentralization, the level of public consumption and labor absorption on economic growth in North Sumatra. The method used by researchers is regression using panel data (pooled data) or called the panel data regression model. The estimation results show the regression coefficient of the CONS variable is -0.185883. This means that with each increase in CONS by 1 percent, economic growth will decrease by 0.18 percent and vice versa. The effect of the CONS variable on EG is negative and significant at the 95 percent confidence level and the estimation results show the regression coefficient of the Labour Force Participation Rate (LFPR) variable of 0.442641. This means that for each increase in LFPR by 1 percent, economic growth will increase by 0.44 percent and vice versa. The effect of the LFPR variable on PE is significant at the 95 percent confidence level.

ФІСКАЛЬНА ДЕЦЕНТРАЛІЗАЦІЯ ЯК ІНСТРУМЕНТ МІНІМІЗАЦІЇ ПОДАТКОВИХ РОЗРИВІВ В ЕКОНОМІЦІ

Current trends in the functioning of the official and shadow sectors indicate the low effectiveness of the existing tools of state regulation of the economy and its inability to ensure long-term economic growth. One of the reasons is tax evasion, which leads to the formation of tax gaps in the economy. Their formation has a negative impact on economic development, reduces the country's budget potential, limits opportunities for funding programs. The paper substantiates that along with the regulation of tax rates, increasing the efficiency of financial monitoring procedures, assessing the probability of implementing tax evasion schemes, an important tool for minimizing tax gaps is the implementation of fiscal decentralization policy. The article analyzes the current trends in the implementation of reform of fiscal decentralization in Ukraine. The dynamics, features and advantages of the formation of united territorial communities are analyzed. It is concluded that the number of formed united territorial communities in Ukraine has been gradually decreasing since 2017. The main features of fiscal decentralization include the expansion of cooperation between individual territorial associations in the field of their economic and social development, growth of their financial potential by combining financial and investment opportunities, implementation of joint measures to regulate economic processes. The role of fiscal decentralization in the implementation of tax gap management policy is substantiated. A comparative analysis of the dynamics of changes in the main indicators of local budget revenues before and after implementation of decentralization reform in Ukraine is carried out. It is concluded that the volume of tax revenues to the state budget will be gradually reduced starting in 2015. This correlates with the beginning of the implementation of the financial decentralization reform in Ukraine. The study concludes that the implementation of decentralization reform in the country as one of the most effective tools to increase the tax potential of the territory, reduce the volume of shadow financial transactions and manage tax gaps.

Vertical fiscal imbalance and local fiscal indiscipline: Empirical evidence from China

Based on Chinese city-level panel dataset, this paper examines the effects of vertical fiscal imbalances (VFI) on local fiscal indiscipline in a partial fiscal decentralization setting. We find that higher VFI induces a form of fiscal indiscipline: a reduction of tax collection effort by local governments. In addition, by exploiting the unique Chinese fiscal institution of “extra-budgetary” revenues, we show that in this case higher VFI does not alter local governments’ tax collection effort. Even though local governments also possess full taxing power for “extra-budgetary” revenues, these revenues do not contribute to the determination of central fiscal transfers to local governments, thus creating very different incentives for local governments response to VFI. Our results shed light on the working mechanism of the VFI and provide significant implications for improving the design of fiscal decentralization policy in China and elsewhere.

Does fiscal decentralization promote economic growth? An empirical approach to the study of China and India

PurposeThe authors test the effect of expenditure decentralization and fiscal equalization on short- and long-run economic growth and estimate two-step generalized method of moment (GMM) simultaneous equations models, using panel data for China and India for the period 1985 to 2005. The authors estimate two simultaneous equations: a growth equation and equalization equation and find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads the authors to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.Design/methodology/approachThe authors estimate two-step GMM simultaneous equations models, using panel data for China and India for the period 1985 to 2005. To examine the effect of fiscal decentralization (FD) policies on economic growth in China and India, the authors estimate two equations: a growth equation and an equalization equation. For the growth equation, the authors adopt a production-function-based model that is widely used in the empirical literature on growth; however, the authors do make some compromises with this specification due to the unavailability of certain data. For the equalization equation, the authors include variables that economic theory and empirical evidence suggest influence fiscal disparities among subnational governments which in turn influence the demand for horizontal fiscal equalization (HFE). To the extent possible, the authors employ the same econometric specification, variable constructions and sample periods for both China and India. The authors believe this strategy provides a more rigorous test of the FD hypothesis.FindingsThe authors find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.Research limitations/implicationsDue to the importance of FD policies, especially to many developing countries that are currently pursuing decentralization reforms, future research should examine the effect of FD on economic growth for other countries. Furthermore, although it would be difficult to do so, future research should examine whether FD promotes political stability on ethnically diverse countries.Originality/valueTo the best of the authors’ knowledge, no one has examined the effect of FD policies on India's growth experience. What is more is that this is also the first of its kind to have a comprehensive empirical investigation into these two major developing countries with very interesting similarities and differences in FD policies. It is thus of great importance to examine the effect of expenditure decentralization and HFE on economic growth in China and India.

The Effect Of Fiscal Decentralization And Economic Growth On Poverty In Gorontalo Province

The implementation of fiscal decentralization policy has a good impact on the development of the potential and creativity of local governments. Effectiveness in managing the results of regional wealth will affect the original income of the region which can then be utilized for the welfare of the community. This study aims to determine the effect of fiscal decentralization and economic growth on poverty in Gorontalo Province. This research uses quantitative methods. The data used in this study were sourced from the Central Statistics Agency and the Directorate General of Fiscal Balance so that the data in this study were secondary data using the econometrics method through a panel data regression equation in the form of a combination of 10-year time series data (2008-2017) and cross section data 6 Regency / City areas in Gorontalo Province. Estimation is done using the Fixed Effect Model (FEM). The results of this study indicate that (1) Partially the degree of fiscal decentralization has a negative effect (unidirectional relationship) and significant on poverty means that the greater the fiscal decentralization variable will have an impact on reducing the level of poverty (2) Partially economic growth has a negative effect (unidirectional relationship) and significant to poverty means increasing economic growth can reduce poverty levels (3) Simultaneously the degree of fiscal decentralization and economic growth have a significant effect on poverty in Gorontalo Province.
 
 Keywords: fiscal decentralization, economic growth, poverty

Rethinking corruption on fiscal decentralization and global competitiveness Nexus

PurposeThis study investigates the effects of fiscal decentralization on global competitiveness through the level of corruption. This study aims to clarify the causal impacts of fiscal decentralization policy on the achievement of competitiveness rank considering the degree of corruption in a country.Design/methodology/approachThe paper uses an empirical study using both cross-country arithmetic mean and panel data, covering ten-year period (2005-2014). The analysis uses both linear and non-linear specification in search of actual intermediating effects of corruption with controlling the possible endogeneity.FindingsThe paper provides empirical insights about corruption effects of fiscal decentralization on global competitiveness. It suggests that increasing level of fiscal decentralization has a positive contribution to competitiveness for the less-corrupt countries. The adverse effects appear for corrupt countries where the delegation of fiscal authority should endanger the country competitiveness.Research limitations/implicationsThis research exploits the well-known measurement of fiscal decentralization, the degree of corruption and competitiveness. Therefore, this measurement might be challenged for representing the real concept of decentralization, corruption and competitiveness, furthermore its relationship. Despite the limitation, this research explores the entanglement of fiscal decentralization, corruption and competitiveness.Practical implicationsThe paper provides the implications for the national policymakers about decentralizing the fiscal authority to achieve higher competitiveness level, through assessing their state of corruption.Originality/valueThe research provides additional comments for Oates’ (1972) decentralization theorem in connection to competitiveness, by adding corruption level as pre-requisite condition.

COAL AND MINERAL AND ITS IMPACT ON HUMAN DEVELOPMENT INDEX: AN EMPIRICAL STUDY IN SOUTH AND EAST KALIMANTAN REGION, INDONESIA

This article aims to analyse the effects of coal and minerals on human development index in South and East Kalimantan Provinces of Indonesia. Historically, Kalimantan was famously known as the largest contributor of coal and mineral production in Indonesia. Under Indonesia's fiscal decentralization policy which effectively ran since 2004, we test: do revenues from coal and minerals negatively affect Human Development Index (HDI)? By focusing on nine coal giant areas within these two provinces that have longer mining histories, and linking it with the coal boom event since the 2000’s, and using panel data analysis with fixed effects controlled, we find that coal and mineral revenues have a positive effect on HDI, contrary with resource curse hypothesis. The results remain consistent regardless of inclusion of other important covariates such as the past level of institutional quality and net student enrolment ratio, or whether revenues in all non-renewable resources are used. However, the positive impact found is small in magnitude. For example, for every 10 percentage points increase in the share in coal and mineral revenues in local government budgets, HDI increases by 0.0085 points, ceteris paribus

ANALISIS PENERIMAAN BEA PEROLEHAN HAK ATAS TANAH DAN BANGUNAN (BPHTB) DI KABUPATEN BANJAR

Helda Yuliana, (2018), “Analysis of The Tax Revenue Fees For Acqiusition of Land and Buildings (BPHTB) in Banjar District”. The transfer of management of Tax for Acquisition of Land and Buildings (BPHTB) and Land and Building Tax–Urban and Rural(PBB-P2) from the central government to regional government is a follow up of regional autonomy and fiscal decentralization policy. With the transfer ofBPHTB inti local taxes, BPHTB took part in contributing tothe District Own Source Revenue(PAD). Thepurpose of this research are to knows how much thecontribution, how effectiveness and efficiency, how BPHTB potency, what are the obstacles in BPHTB collection, and what strategy needs to be done to increase BPHTB revenue. The type of the research isa descriptive method. The data sourece used is secondary data obtained from Bapenda Banjar district to calculate the contribution, effectiveness and efficiency, and primary data obtained from interviews to know the potential, constraints, and strategies in the revenue of BPHTB. The results ofthis research can be concluded that contribution of BPHTB to local revenue (PAD) still deficient. The effectiveness of 2012-2016 is very effective because the effectiveness is always above 100% and the implementation of BPHTB collection is ver efficient. BPHTB of Banjar district has a very high potential and potentially will continue to increase. Obstacles faced by Banjar distict government that is not yet applied marketprice and still only refers to NJOP. Strategy that can be done is by using price comparison and Banjar district government routinely conduct evaluation meeting with BPN and notary/PPAT.Keywords: BPHTB, PAD, contribution,effectiveness, efficiency, potency

Effect of fiscal decentralization policy of regional economic imbalances towards economy growth in Eastern Indonesia

The current research aimed at analyzing and knowing (1) the influence of fiscal decentralization policy towards economic growth in eastern Indonesia and (2) the influence of fiscal decentralization policy towards regional imbalances decline in eastern Indonesia. In order to reach the aims, panel data was analyzed. It was analyzed by accommodating information that related to cross-section variables and time series. The panel data, substantially, is expected to be able to decrease the problems of omitted-variables. Furthermore, regression effect analysis was applied for estimating the econometric model. The results of the current research have shown that: (1) fiscal decentralization policy influences growth of the regional economy, and (2) the relationship of fiscal decentralization policy with regional imbalance has confirmed that the decentralization fiscal has not got any ability to reduce the imbalances economy of eastern Indonesia.

Labor Absorption and the Growth of Agricultural Output: A Simultaneous Spatial Durbin Panel Data Model Perspective of Fiscal Decentralization’s Impact in Indonesia

This study aims to examine the empirical and short-term relationship between the implementation of fiscal decentralization policies and employment in Indonesia during the period from 2007-2015. We observe the impact of local government policies during the decentralization period through regional fiscal policy instruments, using the simultaneous equation of spatial Durbin panel data with the GMM approach. Significant changes that were expected from the post-centralization era after 1.5 decades of this policy have not been seen. Our main findings document that fiscal decentralization has not yet had a positive effect on employment and the agricultural sector’s production.

Fiscal Decentralization Policies in the EU: A Comparative Analysis through a Club Convergence Analysis

We study the degree of convergence or divergence in fiscal decentralization in the European Union over the period 1995–2015 using a club convergence approach. First, we analyze non-central expenditure and revenue as percentages of GDP, of total expenditure and of total revenue. The results for the EU-15 countries indicate some clustering, with three clubs formed when using GDP and four to five when using total revenue or expenditure. Second, we study the gap between expenditure and revenue as a proxy of fiscal responsibility. This results in three and two clubs respectively, with Denmark as the divergent country with the highest gap. Finally, we analyze potential unions of clubs and transitions. We also interpret our results taking into account variables found in the literature as determinants of fiscal decentralization. These results show how European countries are quite heterogeneous in terms of fiscal federalism and decentralization, with greater convergence in fiscal responsibility than in the other magnitudes.

THE IMPACT OF FISCAL DECENTRALIZATION ON INCOME AND EDUCATION INEQUALITY THROUGH ECONOMIC GROWTH IN EAST JAVA

There are still many districts in East Java Province that are categorized as underdeveloped regions, which means that the region has low economic growth with a high income and education inequality. An economic model analysis that illustrates how the impact of fiscal decentralization has been exercised on income inequality and inequality of education through economic growth is needed. The analysis model used is path analysis to determine the direct and indirect impact of fiscal decentralization on income and education inequality through economic growth. The data used in the study were panel data from 2008 to 2015 collected from 29 districts in the East Java Province. The results of the study indicate that the implementation of the fiscal decentralization policy has not been able to encourage economic growth and reduce the number of income inequality and inequality of education. Decentralization makes income inequality even more intense. Economic growth has not been able to reduce the income inequality, but it can reduce the rate of education inequality.