Jun 21st, 2015
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American Sentinel University - Birmingham
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IntroductionThis research contributes to providing insights into the impact of decentralization on poverty. It starts out with an overview of which role decentralization plays in strategies and policies for poverty eradication and derives economic and political impact channels. It concentrates on the economic channel, the reasoning of which is rooted in fiscal federalism theory. It shows that decentralization cannot only influence poverty by assigning expenditure responsibility to lower levels of government but also by assigning tax-raising power, which has so far been neglected by the literature. The paper concludes by pointing out a number of possible risks for realising the poverty-reducing potential of decentralization.DECENTRALISATION POLICY AND POVERTYAre decentralized forms of government more responsive to the needs of the poor and hence more likely to conceive and implement pro-poor policies? Decentralization advocates argue that, because decentralization brings government closer to the governed both spatially and institutionally, government will be more knowledgeable about and responsive to the needs of the people.This tendency to conate decentralization with democratization and enhancement of participation at the community level underlies the belief that decentralization will lead to greater responsiveness to the poor. Insofar as the majority of the population in developing countries is both poor and excluded from elite politics, any scheme tha

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