Research Article

The Effect of Fiscal Decentralization on The Human Development Index and Its Components: A Panel Data Study

Volume: 7 Number: 2 October 20, 2021
TR EN

The Effect of Fiscal Decentralization on The Human Development Index and Its Components: A Panel Data Study

Abstract

Most countries worldwide in recent decades, particularly developing and transition countries, have implemented decentralization in their governance structures. The main purpose of decentralization is the idea that local government can deliver local needs and preferences to their communities more accurately. However, some researchers argue that decentralization has its limitations and point out an optimal fiscal decentralization size. This paper investigates the effect of fiscal decentralization on the human development index and its components by using panel data between the period 2000 to 2010 from 49 countries. Using robust OLS and Fixed Effect methods, results suggest that the revenue measure of fiscal decentralization has a significant and positive effect on the human development index. Furthermore, results show that this effect is non-linear may diminish once the degree of fiscal decentralization crosses a threshold.

Keywords

References

  1. Bahl, R. W., & Linn, J. F. (1992). Urban public finance in developing countries. The World Bank.
  2. Davoodi, H., & Zou, H. F. (1998). Fiscal decentralization and economic growth: A cross-country study. Journal of Urban economics, 43(2), 244-257.
  3. Cantarero, D., & Pascual, M. (2008). Analysing the impact of fiscal decentralization on health outcomes: empirical evidence from Spain. Applied Economics Letters, 15(2), 109-111.
  4. Enikolopov, R., & Zhuravskaya, E. (2007). Decentralization and political institutions. Journal of public economics, 91(11-12), 2261-2290.
  5. Javed, Z. H., & Qaderi, S. (2013). Does Fiscal Decentralization Nexus with Life Expectancy? Evidence from Pakistan. Journal of Economics, Management and Trade, 115-122.
  6. Jumadi, M. P., Ghozali, M., & Khusaini, M. (2013). The impact of fiscal decentralization on local economic development in East Java. IOSR Journal of Humanities and Social Science, 13(1), 01-07.
  7. Kohler, U., & Kreuter, F. (2005). Data analysis using Stata. Stata press.
  8. Limi, A. (2005). Decentralization and economic growth revisited: an empirical note. Journal of Urban economics, 57(3), 449-461.

Details

Primary Language

English

Subjects

Economics

Journal Section

Research Article

Publication Date

October 20, 2021

Submission Date

June 19, 2021

Acceptance Date

August 6, 2021

Published in Issue

Year 2021 Volume: 7 Number: 2

APA
Tümay, M. (2021). The Effect of Fiscal Decentralization on The Human Development Index and Its Components: A Panel Data Study. Uluslararası Ekonomi Ve Yenilik Dergisi, 7(2), 357-373. https://doi.org/10.20979/ueyd.954645

Cited By

International Journal of Economics and Innovation

Karadeniz Technical University, Department of Economics, 61080, Trabzon/Türkiye

https://dergipark.org.tr/en/pub/ueyd


33974

 This work is licensed under a Creative Commons Attribution 4.0 International License.