## Fiscal Decentralization and the Efficiency of Public Service Delivery

_IMF Working Papers, March 17, 2015_

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## Bibliographic details
- Authors: Moussé Sow, Ivohasina F Razafimahefa
- Published: March 17, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484351116.001

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### Summary of analysis and method
- Uses a stochastic frontier method to estimate time-varying efficiency coefficients.
- Analyzes the impact of fiscal decentralization on those estimated efficiency coefficients.

### Key findings
- Fiscal decentralization can improve the efficiency of public service delivery but only under specific conditions.
- Required conditions for favorable outcomes:
  - Adequate political and institutional environments.
  - A sufficient degree of expenditure decentralization.
  - Decentralization of expenditure must be accompanied by sufficient decentralization of revenue.
- Absent those conditions, fiscal decentralization can worsen the efficiency of public service delivery.

### Policy implications and recommendations
- Prioritize building adequate political and institutional environments before or alongside decentralization reforms.
- Ensure expenditure decentralization reaches a sufficient degree to enable efficiency gains.
- Pair expenditure decentralization with sufficient revenue decentralization to avoid adverse efficiency effects.

### Subject coverage and keywords
- Subject: Education, Expenditure, Fiscal federalism, Health, Public employment
- Keywords: fiscal decentralization, public expenditure, significance level, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-decentralization-and-the-efficiency-of-public-service-delivery-42789_