Fiscal Decentralization Research Articles

Revenue Decentralization and Healthcare Service Delivery in Turkana County, Kenya

Purpose: This study examined the effect of revenue decentralization on healthcare service delivery in Turkana County, Kenya. Materials and Methods: Using a mixed-methods approach, the research collected data from 271 respondents, including county health and finance officials, hospital administrators, and community health representatives. Findings: The findings reveal that revenue decentralization significantly improves healthcare service delivery, with a one-unit increase in revenue decentralization leading to a 0.49-unit improvement in healthcare outcomes. However, delays in budget disbursement (averaging 5.11 months) and reliance on external revenue sources (36.9% tax autonomy) highlight challenges in financial sustainability and resource allocation. Qualitative responses underscore both the benefits of increased autonomy and access to funding, as well as the drawbacks of concentrated financing and disparities in rural healthcare access. The study concludes that optimizing tax autonomy mechanisms, strengthening intergovernmental grants, and improving financial management are critical to enhancing the positive effects of revenue decentralization. These findings contribute to the broader discourse on fiscal decentralization and its potential to address healthcare inequities in marginalized regions. Unique Contribution to Theory, Practice and Policy: To improve healthcare in Turkana County, enhance revenue decentralization by refining tax autonomy, increasing equitable intergovernmental grants, and addressing rural disparities. Implement 'nomadic health vouchers' using 15% of decentralized revenues and 'fiscal health compacts' to reduce budget delays. Ensure autonomy, accountability via blockchain, and drought-responsive budgets work together to boost accessibility and patient support, transforming fiscal policy into a tool for healthcare justice, especially for mothers and herders facing long waits and travel for care.

Optimal expenditure decentralization for sustainable development: evidence from a 52-country panel analysis

Abstract In response to the critical need to balance fiscal expenditure governance with sustainable development, this study identifies the optimal level of fiscal expenditure decentralization that enhances sustainable outcomes. The study aims to determine the optimal expenditure decentralization that maximizes sustainable development outcomes across these dimensions. Theoretically, we analyze the impact mechanism of expenditure decentralization on sustainable development and hypothesize that there is an inverted U-shaped relationship between them, along with the possibility of finding an optimal level of expenditure decentralization. We test this hypothesis by measuring sustainable development in the context of a panel data set for 52 countries covering the period 1991–2016 using the National Sustainable Development Index (NSDI). We find strong support for the inverted U-shaped relationship between expenditure decentralization and sustainable development in both the short and long run. Sustainable development is the coordination of economic, social, and environmental development to balance intergenerational welfare and maximize the total welfare of all generations. Excessive and insufficient expenditure decentralization can potentially negatively affect the efficiency of public goods provision and residents’ utility, thereby adversely impacting total welfare and sustainable development. The results are robust to alternative specifications and to IV estimation to correct for potential endogeneity. The expenditure decentralization level most conducive to sustainable development lies between 30.9% and 34.5%. The optimal decentralization range was determined using the Lind–Mehlum method, supporting the main findings of this study. This research thus contributes to the literature by quantifying the complex relationship between fiscal decentralization policies and sustainable development, providing a clear, actionable pathway for policymakers seeking sustainable outcomes.

Fiscal Decentralization and Poverty in Selected African Countries: A Case of Per Capital Index

This investigated how fiscal decentralization influences poverty in selected African countries from the implication of fiscal decentralization on per capita income of the citizens of the selected African countries. The study adopted an ex post facto research design, and data were collected from World Bank Indicators (WDI), the International Monetary Fund (IMF) fiscal decentralization database, and the World Governance Index (WGI) of ten selected African countries for a period of 18 years from 2006 to 2023 fiscal years. The study employed descriptive statistics and inferential regression analysis. Considering using the panel unit root test (PURT) of Levin, Lin, and Chu (LLC, 2002) and Im, Persaran, and Shin (IPS, 2003), the Augmented Dickey-Fuller (ADF) and the Philips-Perron (PP)-based tests were also tested as first-generation PURT. The panel regression analysis revealed that fiscal decentralization determinants had a significant effect on per capita income as a measure of poverty. The findings demonstrated that effective fiscal decentralization practice has the ability to enhance per capita income rating in Africa. The study recommended that governments at all levels should carefully explore and maximize true fiscal decentralization practices to improve the per capita income of their citizens.

Human Development and Fiscal Decentralization and Poverty in Ten African Countries (2006-2023): An Econometric Case Study

Human development plays a vital role in empowering individuals with the necessary skills, education, healthcare, and employment opportunities required to drive sustainable economic growth, reduce poverty, and improve the overall quality of life across African countries. However, many governments across the continent have not fully utilized national resources to foster such development. Moreover, there is limited empirical evidence on the role of fiscal decentralization in enhancing human development in Africa. To address this gap, this study investigates the impact of fiscal decentralization on human development in selected African countries. The analysis is based on panel data covering ten African countries over an 18-year period (2006–2023), sourced from the World Development Indicators (WDI), the International Monetary Fund (IMF) Fiscal Decentralization Database, and the World Governance Index (WGI). The study utilizes both descriptive statistics and inferential regression techniques. Specifically, it applies panel unit root tests, including Levin, Lin, and Chu (LLC, 2002), Im, Pesaran, and Shin (IPS, 2003), as well as the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests categorized as first-generation panel unit root tests. The findings reveal that key indicators of fiscal decentralization significantly influence the Human Development Index (HDI) in the sampled African countries. Based on these results, the study recommends that the governments of these countries adopt and implement sustainable economic policies that prioritize fiscal decentralization as a means of advancing human development across the continent.

ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE REGIONAL GOVERNMENT OF CENTRAL BENGKULU REGENCY WITH THE APPROACH OF THE PERFORMANCE MEASUREMENT

This study aims to analyze the financial performance of the regional government of Central Bengkulu Regency with a performance measurement system approach using financial ratio indicators, such as the effectiveness ratio, fiscal decentralization ratio, efficiency ratio, and growth ratio. This research uses a quantitative descriptive approach with secondary data in the form of the 2019-2023 Budget Realization Report. The data collection technique was carried out with a documentation study accessed from the official website of the DJPK (Directorate General of Fiscal Balance). The results showed that the average effectiveness ratio was classified as effective with a figure of 94.95%. In contrast, the fiscal decentralization ratio only reached an average of 3.30% with a very low category. On the other hand, the average fiscal decentralization ratio reached 3089.50%, indicating very high inefficiency. Meanwhile, the PAD growth ratio experienced fluctuations but in a positive direction.

The Effect of Fiscal Decentralization on Tax Compliance Time: Evidence From the World Bank Doing Business Project

Abstract This paper investigates the impact of fiscal decentralization on tax compliance time. I postulate that fiscal decentralization is a means of inducing better targeting of public services and enhancing the efficiency of public service delivery because local governments respond to incentives to perform better and compete to attract a mobile tax base. This, in turn, reduces the level of tax administration burden, that is, businesses need less time to comply with taxes. Using panel data for 79 countries from 2006 to 2020, I find that fiscal decentralization is negatively associated with tax compliance time, particularly in developing countries.

How do fiscal decentralization and transfer payment disparities widen inequities in elderly care access and utilization in China?

This study evaluates the impact of fiscal decentralization and central transfer payments on the equitable distribution of elderly care services in China. Analyzing the 2020 China Civil Affairs Statistical Yearbook and China Health and Retirement Longitudinal Study data reveals significant regional disparities in elderly care access and utilization. Eastern provinces demonstrate superior outcomes compared to western provinces, which exceed central and northeastern regions. Fiscal decentralization, designating local governments as primary providers of public goods, combined with transfer payments that disproportionately favor wealthier western provinces, exacerbates these disparities, particularly in rural areas. The findings necessitate urgent reforms to China’s fiscal decentralization and transfer systems to enhance equity, with priority given to disadvantaged regions housing larger elderly populations.

Does fiscal decentralization foster renewable electricity generation? A panel data study of OECD countries

As the global community intensifies efforts to transition toward sustainable energy systems, the role of institutional and fiscal arrangements in fostering renewable energy has gained increasing attention. This study aims to assess whether fiscal decentralization contributes to the expansion of renewable electricity generation in OECD countries by analyzing panel data and identifying the direction and significance of this relationship. Utilizing a panel dataset of 34 countries spanning 2000–2023, the analysis employs a fixed-effects regression model with Driscoll-Kraay standard errors. It includes a one-year lag of fiscal variables to ensure robustness. The findings reveal a statistically significant but modest negative relationship between the share of subnational revenues in GDP and the share of renewables in electricity generation, suggesting that greater fiscal decentralization may not automatically incentivize renewable energy adoption. More specifically, the fixed-effects model corrected for heteroskedasticity and autocorrelation indicates that the coefficient for lagged subnational revenue (as a percentage of GDP) is negative and marginally significant (p ≈ 0.057), hinting at a potential delayed inhibitory effect. Additionally, country-level fixed effects demonstrate substantial heterogeneity, with nations like Iceland, Norway, and Canada showing systematically higher renewable electricity shares, regardless of fiscal structure. These results underscore the importance of complementary institutional frameworks and national coordination mechanisms to ensure that decentralization effectively supports climate policy goals. AcknowledgmentThis study was carried out within the framework of a research grant awarded by the Swiss National Science Foundation (grant no. IZURZ1_224119/1) and funded by the European Union grant “NextGenerationEU through the Recovery and Resilience Plan for Slovakia” (No. 09I03-03-V01-00130) and project VEGA – 1/0392/23 “Changes in the approach to the creation of companies’ distribution management concepts influenced by the effects of social and economic crises caused by the global pandemic and increased security risks”.

Analysis of the Influence of Local Government Financial Performance on Economic Growth with Capital Expenditure Allocation as an Intervening Variable in the Regency/City of Sumatera Utara Province

This study aims to examine the effect of financial performance on economic growth with capital expenditure allocation as an intervening variable in Regency/City Governments in Sumatra Utara Province. The study sample consisted of 33 regencies/cities in Sumatra Utara Province. The financial performance variables measured were efficiency, effectiveness, independence, and fiscal decentralization. Data were analyzed using path analysis using the EViews program based on secondary data in the form of panel data sourced from Regency/City Local Government Budget data in Sumatra Utara Province. The results of the study indicate that efficiency has a positive and significant effect on economic growth, while effectiveness has a positive and significant effect on economic growth. The independence variable has a negative and insignificant effect on economic growth, and the fiscal decentralization variable has a positive and insignificant effect on economic growth. For the indirect effect, the capital expenditure allocation variable only mediates the efficiency variable on economic growth. In contrast, the effectiveness, independence, and fiscal decentralization variables cannot be mediated by capital expenditure allocation on economic growth. Keywords: efficiency, effectiveness, independence, fiscal decentralization, capital expenditure allocation, and economic growth.

How does China's fiscal decentralization reform of “county directly Administrated by province” influence green economic efficiency?

How does China's fiscal decentralization reform of “county directly Administrated by province” influence green economic efficiency?

ANALISIS RASIO KEUANGAN APBD UNTUK MENILAI KINERJA KEUANGAN PEMERINTAH PROVINSI JAWA BARAT TAHUN ANGARAN 2020-2024

This study aims to analyze the financial performance of the West Java Provincial Government using financial ratio analysis based on the Regional Budget (APBD) for the fiscal years 2020–2024. The research employs a descriptive quantitative method using secondary data from the Budget Realization Report. The analysis includes five financial ratios: fiscal independence, degree of fiscal decentralization, PAD effectiveness, expenditure harmony, and the share and growth of locally generated revenue (PAD). The results show that West Java’s financial performance is categorized as moderately good, with an increasing level of fiscal independence, although PAD effectiveness remains suboptimal. The fiscal capacity mapping places the province in quadrant II, indicating high PAD growth but a contribution level that still requires improvement. These findings reflect strong fiscal potential that needs more focused management strategies.

Investigative audit of irregularities in village fund management

Village funds are a vital component of fiscal decentralization policies aimed at directly supporting rural development and community empowerment. However, various reports indicate that irregularities in the management of village funds remain widespread across different regions. This study aims to analyze the implementation of investigative audits in uncovering irregularities in village fund management in Indonesia. Using a qualitative approach with a phenomenological study, the findings reveal instances of corruption such as fictitious procurement, budget mark-ups, and abuse of authority by village officials. The study recommends strengthening supervision, digitalizing village financial systems, and enhancing the capacity of village apparatus and community participation. The implications highlight the importance of legal enforcement and the improvement of procurement systems through digitalization and transparency.

ANALISIS PERBANDINGAN KINERJA KEUANGAN PROVINSI DI PULAU JAWA DAN PULAU KALIMANTAN TAHUN ANGGARAN 2024

Introduction: This study analyzes the comparison of financial performance between provinces in Java and Kalimantan during the 2024 fiscal year. The aim of this research is to assess the level of fiscal dependency and the degree of fiscal decentralization as indicators of regional financial performance. Methods: This quantitative descriptive study uses secondary data obtained from the 2024 Budget Realization Reports (LRA) of eleven provinces, consisting of six from Java and five from Kalimantan. The analysis employs two financial ratios: the fiscal dependency ratio and the degree of fiscal decentralization. Results: The results show that provinces in Java exhibit lower fiscal dependency and higher fiscal decentralization compared to those in Kalimantan. Banten, DKI Jakarta, and West Java demonstrate the best financial performance, with dependency ratios below 30% and decentralization degrees above 70%. In contrast, provinces such as North Kalimantan and Central Kalimantan show dependency levels above 60% and decentralization degrees below 35%. These findings reflect a significant gap in fiscal independence between regions. In conclusion, increasing Local Own-Source Revenue (PAD) through local economic development and improved governance is crucial to enhancing fiscal autonomy in Kalimantan provinces. Keyword: Fiscal Decentralization, Fiscal Dependency, Financial Performance, And Regional Autonomy

Spatial Analysis of Digital Transformation on Food Security in Sumatra: Amidst Climate Change

This study aims to analyze the impact of digital transformation on food security in Sumatra. The research utilizes panel data from 154 districts and cities covering the period from 2019 to 2022. Food security levels are measured using the entropy method, while the effects of digital transformation are assessed through spatial panel regression to capture both spatial and temporal variations.The results indicate that digitalization has a significant positive effect on food security in the long run. This suggests that advancements in digital technology contribute to improving food systems, enhancing distribution efficiency, and increasing access to food resources. On the other hand, fiscal decentralization policies are found to have a significant negative effect on food security, implying that disparities in regional governance capabilities may hinder efforts to improve food security across different areas. In addition to digitalization, other factors such as electrification, industrialization, and population growth show significant positive effects on food security. Electrification facilitates better access to energy, which supports agricultural infrastructure and food storage. Industrialization boosts productivity and the development of food supply chains, while population growth, despite increasing food demand, can drive agricultural expansion and improvements in food distribution when managed effectively.Overall, this study highlights the crucial role of digital transformation in enhancing food security, while also emphasizing the need for equitable fiscal policies to reduce regional disparities in food access and availability.

Accountability of the Village Financial System in North Sumatra

Village financial management is a crucial aspect in realizing transparent, accountable, and participatory village governance. Along with the increasing allocation of village funds through fiscal decentralization policies, various irregularities and inefficiencies have emerged, particularly in rural areas such as North Sumatra. This study aims to explore the experiences and perceptions of village officials in managing village finances using a descriptive phenomenological approach. Data were collected through in-depth interviews with village apparatus, treasurers, and oversight officials in several districts across North Sumatra. The findings reveal that although village officials have utilized the Siskeudes application as a financial management tool, their understanding of regulations and good governance principles remains limited. Moreover, the reliance on third parties (such as village facilitators) and the lack of community participation have resulted in a management process that is predominantly administrative and formalistic, lacking in true accountability. The study concludes that strengthening human resource capacity, enhancing internal oversight, and fostering active community involvement are key to improving the village financial management system in North Sumatra. This research provides a concrete depiction of the dynamics and challenges faced by village governments in implementing effective and integrity-based financial governance.

Capital market consequence of expansionary fiscal policy: evidence from local government debt

ABSTRACT China has conducted fiscal management system reform since 2015. Based on sample during 2015–2021, this paper confirms that more local government debt is associated with firm’s higher crash-prone, conclusion remains unchanged after addressing endogeneity concerns. Influencing mechanisms confirm the mediate role of crowding-out effect and assets portfolio effect. Further analyses confirm that property right nature and fiscal decentralization moderate the relation. By discussing institutional reforms, we find that firms facing higher financial constraints show larger crash-prone after implementation of the revised Budget Law. Overall, this paper provides useful suggestions for policymakers to recognize and supervise information management behaviors of managers.

PENGARUH DANA ALOKASI UMUM, PENDAPATAN ASLI DAERAH, RETRIBUSI DAERAH DAN PAJAK DAERAH TERHADAP PERTUMBUHAN EKONOMI PADA SUMATERA UTARA

Economic growth is an important indicator in measuring the level of community welfare and the success of regional development. This study aims to analyze the effect of the General Allocation Fund (DAU), Regional Original Income (PAD), Regional Retributions, and Regional Taxes on economic growth in North Sumatra Province. The background of this study is based on the fluctuation of economic growth in the region in the period 2020–2022, as well as the importance of optimizing regional revenue sources as part of the fiscal decentralization strategy. DAU, PAD, levies, and regional taxes are considered the main instruments in supporting regional government spending to encourage infrastructure development and public services. This research was conducted through a literature approach that examines previous theories and findings related to the contribution of regional income to economic growth. The results of the study show that the four regional income variables are closely related to increasing regional economic activity. The General Allocation Fund functions as a fiscal equalization tool, while PAD, levies, and regional taxes reflect local fiscal capacity in financing development. Thus, increasing regional income is expected to strengthen economic growth in North Sumatra Province in a sustainable manner.

Do the United States'fiscal decentralization, money supply, and environmental policies promote the clean energy transition?

Abstract Following the “Glasgow Climate Change Conference (COP26)” in 2021, policymakers pay more light on the role of cleaner fuels in curbing environmental destruction. Despite being the second-largest user of renewable energy, the United States (USA) has not given much attention to the factors that determine “renewable energy consumption (RENC)”. In this milieu, this study considers some unique determinants such as “monetary policy, fiscal decentralization, eco-innovation, economic growth, CO2e, the environmental policy stringency index, and economic policy uncertainty” to explore RENC. The current study uses wavelet coherence, as well as partial and multiple wavelet coherence techniques, with quarterly data extending from 1990Q1 to 2020Q4. The wavelet coherence findings show a significant long-and medium-term in-phase connection between RENC, fiscal decentralization, and economic growth, whereas money supply shows a significant in-phase connection in the medium-term frequency. Besides, increased carbon emissions, environmental policy stringency, and eco-innovation lead to higher RENC in the short-medium term. The analysis of partial and multiple are somewhat like the findings of wavelet coherence in different frequency and time domains. These results have significant policy ramifications for promoting RENC and achieving the “UN Sustainable Development Goals (UNSDGs) 7 (affordable clean energy)”. From a policy lens, the USA should decentralize its fiscal policy at the state level, allocating more funds to clean technology research and development. Additionally, sufficient financial resources for increasing investment in the renewable energy industry and stricter environmental regulations may increase the usage of clean energy.

Faktor Penentu Akuntabilitas Keuangan Daerah: Analisis Moderasi SPI

This study aims to analyze the effect of fiscal decentralization, dependence on the central government, regional financial management, and regional government performance on the accountability of regional financial reports, as well as the moderating role of the Internal Control System (ISC) in this relationship. This study uses a positivistic quantitative approach with cross-section data from 35 regional governments in Central Java Province during 2019–2023, obtained through documentation of financial reports and government audit results. Accountability is measured based on audit opinions, and ISC serves as a moderating variable. Analysis techniques include descriptive statistics, classical assumption tests, moderation regression, and hypothesis tests. The results show that fiscal decentralization, financial management, and regional government performance have a significant positive effect on accountability, while dependence on the central government has a significant negative effect. ISC moderates these relationships differently: weakening the positive effect of the first three variables, but strengthening the negative effect of dependence on the central government. Overall, all variables and their interactions are proven to significantly affect accountability. These findings emphasize the importance of strengthening proportional ISC and optimizing fiscal decentralization in order to improve transparency and accountability of regional finances.

Fiscal Decentralization and Economic Growth of Sudurpashchim Province

Purpose: The study aims to analyze how Nepal’s fiscal decentralization has affected the economic growth and implementation status of elected government agencies of Sudurpashchim Province after introducing a new federal government structure. Methods: The study employed a descriptive and analytical research design that considered a quantitative approach using primary and time series data. Among 88 local-level governments, 46 were selected as samples. The primary data were collected through a semi-structured questionnaire and secondary data were collected from the annual report of the Ministry of Financial Affairs of Sudurpaschim Province. Results: The results show that around 50 percent of local-level governments only utilized the exclusive right and regarding the concurrent rights majority of the local-level governments are ambiguous. The expenditure of local level governments has been found significant and positive impact on economic growth. Whereas, the expenditure of provincial and federal governments has been found insignificant. Conclusion: The provincial government has a very small part of revenue-generating rights, for strengthening the federal system, more economic rights should be provided. The findings of the study are useful to policymakers and employees of local-level governments, provincial governments, and federal governments.