Development Outcomes

This chapter provides an empirical analysis of the extent to which fiscal decentralization and quality of government impact various development outcomes in a sample of 61 countries between 1995 and 2019, including human development, income inequality, education inequality, and poverty. Based on a data panel analysis, it is confirmed that the high quality of government enhances human development and reduces income and education inequalities as well as poverty. Additionally, it is observed a positive relationship between greater public expenditure decentralization and higher levels of human development, lower income, and education inequality, but often with the drawback of worsening poverty. Finally, it is noted that the effect of public expenditure decentralization on human development changes direction as its degree increases.