{
  "title": "Fiscal Decentralization Improves Social Outcomes When Countries Have Good Governance",
  "publication": "IMF Working Papers, June 3, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/06/03/fiscal-decentralization-improves-social-outcomes-when-countries-have-good-governance-518882",
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  "summary": "Does fiscal decentralization improve health and educational outcomes? Does this improvement depend on the quality of governance? How do fiscal decentralization and governance interact? We answer these questions through an instrumental variable Tobit analysis of cross-country panel data.",
  "sections": [
    {
      "heading": "Research question and methods",
      "content": "- Does fiscal decentralization improve health and educational outcomes?\n- Does this improvement depend on the quality of governance?\n- How do fiscal decentralization and governance interact?\n- Method: instrumental variable Tobit analysis of cross-country panel data."
    },
    {
      "heading": "Key findings",
      "content": "- Negative effects of fiscal decentralization on health outcomes.\n- The negative health effects of fiscal decentralization are more than offset by better governance.\n- Education expenditure decentralization to subnational governments enhances educational outcomes.\n- Countries can only reap the benefits from decentralization when the quality of their governance arrangements exceeds a certain threshold.\n- Sequencing and staging of decentralization matter."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Improve government effectiveness first to maximize benefits of fiscal decentralization.\n- Strengthen control of corruption before or alongside decentralization reforms to maximize social outcome gains.\n- Sequence and stage decentralization reforms rather than implementing full decentralization without governance improvements."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Corruption, Crime, Education, Expenditure, Fiscal federalism, Fiscal policy, Health, Health care spending\n- Keywords: Corruption, decentralization matter, Education, education expenditure decentralization, Fiscal Decentralization, Fiscal federalism, Global, Governance, governance Indicator, government effectiveness, Health, Health care spending, health outcome, Subnational government\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/06/03/fiscal-decentralization-improves-social-outcomes-when-countries-have-good-governance-518882"
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    "Authors: Ryota Nakatani, Qianqian Zhang, Isaura Garcia Valdes",
    "Published: June 3, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400211768.001",
    "Does fiscal decentralization improve health and educational outcomes?",
    "Does this improvement depend on the quality of governance?",
    "How do fiscal decentralization and governance interact?",
    "Method: instrumental variable Tobit analysis of cross-country panel data.",
    "Negative effects of fiscal decentralization on health outcomes.",
    "The negative health effects of fiscal decentralization are more than offset by better governance.",
    "Education expenditure decentralization to subnational governments enhances educational outcomes.",
    "Countries can only reap the benefits from decentralization when the quality of their governance arrangements exceeds a certain threshold.",
    "Sequencing and staging of decentralization matter.",
    "Improve government effectiveness first to maximize benefits of fiscal decentralization.",
    "Strengthen control of corruption before or alongside decentralization reforms to maximize social outcome gains.",
    "Sequence and stage decentralization reforms rather than implementing full decentralization without governance improvements.",
    "Subject: Corruption, Crime, Education, Expenditure, Fiscal federalism, Fiscal policy, Health, Health care spending",
    "Keywords: Corruption, decentralization matter, Education, education expenditure decentralization, Fiscal Decentralization, Fiscal federalism, Global, Governance, governance Indicator, government effectiveness, Health, Health care spending, health outcome, Subnational government",
    "**Working Paper**"
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