This study analyzed the impact of fiscal decentralization on the efficiency of public service delivery across 37 countries for the periods ranging from 2008 to 2018. The study employed a stochastic frontier approach to estimate time-varying efficiency coefficients and investigated the impact of different measures of fiscal decentralization on the estimated efficiency coefficients using the panel of fully modified ordinary least squares. The findings revealed that fiscal decentralization improved the efficiency of public service delivery. In specific terms, first, expenditure and tax revenue decentralizations considerably impacted the improvements of the efficiency of public service delivery. Second, it was observed that fiscal decentralization would guarantee sustained improvement in the efficiency gains obtained from public service delivery under favorable political and institutional environments. Third, a low level of decentralization will be detrimental to improving the efficiency of public service delivery. The study recommended that the governments of respective countries should ensure adequate linkages between revenue/tax sources and expenditure assignments and make frantic efforts to strengthen political and institutional environments to improve efficiency gains from public expenditure outcomes.

1. Adam, A., Delis, M. D., & Kammas, P. (2012). Fiscal decentralization and public sector efficiency: Evidence from OECD countries(MPRA Working Paper No. 36889). https://mpra.ub.uni-muenchen.de/36889/
2. Ahmad, J., Devarajan, S., Khemani, S., & Shah, S. (2005). Decentralization and service delivery(World Bank Policy Research Working Paper No. 3603) . https://documents1.worldbank.org/curated/en/606871468139500265/pdf/wps3603.pdf
3. Arends, H. (2020). The dangers of fiscal decentralization and public service delivery : A review of arguments. Polit Vierteljahresschr, 61, 599–622. https://doi.org/10.1007/s11615-020-00233-7
4. Bardhan, P., & Mookherjee, D. (2004). Poverty alleviation efforts in panchayats of West Bengal. Economic and Political Weekly, 39(9), 965 – 974. https://www.jstor.org/stable/4414708
5. Battese, G. E., & Coelli, T. J. (1988). Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data. Journal of Econometrics, 38 (3) ,387 – 3 9 9 . https://doi.org/10.1016/0304-4076(88)90053-X
6. Brosio, G. (2014). Decentralization and public service delivery in Asia(Asian Development Bank Economics Working Paper Series No. 389). http://dx.doi.org/10.2139/ssrn.2479233
7. Brown, C. V., & Jackson, P. M. (1990). Fiscal decentralization. Blackwell Publishers Inc.
8. Dada, E. (2015). Fiscal decentralization and social services in Nigeria(AERC Research Paper No. 291). https://media.africaportal.org/documents/RP291.pdf
9. Dash, A. K., & Rath, S. S. (2016). Fiscal performance of North Eastern states of India. Arthshastra Indian Journal of Economics & Research, 5(6), 31– 41. https://doi.org/10.17010/aijer/2016/v5i6/107521
10. Davoodi, H., & Zou, H. - F. (1998). Fiscal decentralization and economic growth: A cross-country study. Journal of Urban Economics, 43(2), 244 – 257. https://doi.org/10.1006/juec.1997.2042
11. Dick-Sagoe, C. (2020). Decentralization for improving the provision of public services in developing countries: Acritical review. Cogent Economics & Finance, 8 (1) , 1–13 . https://doi.org/10.1080/23322039.2020.1804036
12. Dritsakis, N., & Stamatiou, P. (2017). Foreign direct investment, exports, unemployment and economic growth in the new EU members: A panel data approach. International Economics, 70 (4), 443–468. https://econpapers.repec.org/article/risecoint/0812.htm
13. Enikolopov, R., & Zhuravskaya, E. (2007). Decentralization and political institutions.Journal of Public Economics, 91(11–12), 2261–2290. https://doi.org/10.1016/j.jpubeco.2007.02.006
14. Eskeland, G., & Filmer, D. (2002). Autonomy, participation, and learning in Argentine schools: Findings and their implications for decentralization (World Bank Policy Research Working Paper No. 2766). http://hdl.handle.net/10986/15727
15. Foguet, J.-P. (2001). Does decentralization increase responsiveness to local needs? Evidence from Bolivia(World Bank Policy Research Working Paper No. 2516). http://hdl.handle.net/10986/19723
16. Freinkman, L., & Plekhanov, A. (2010). Fiscal decentralization and the quality of public services in Russian regions. Public Finance and Management, 10, 117–168. http://hdl.handle.net/10986/5749
17. Galasso, E., & Ravallion, M. (2005). Decentralised targeting of an anti-poverty program. Journal of Public Economics, 89, 705–727. https://doi.org/10.1016/j.jpubeco.2003.01.002
18. Göcen, S., Bayhanay, A., & Göktaş, N. (2017). Fiscal decentralization and economic growth: Theory and application (MPRA Paper No. 84523). https://mpra.ub.uni-muenchen.de/84523/
19. Jondrow, J., Lovell, C. A. K., Materov, I. S., & Schmidt, P. (1982). On the estimation of technical inefficiency in the stochastic frontier production function model. Journal of Econometrics, 19(2–3), 233–238. https://doi.org/10.1016/0304-4076(82)90004-5
20. Khaleghian, P. (2003). Decentralization and public services: The case of immunization(World Bank Policy Research Working Paper No. 2989). http://hdl.handle.net/10986/19159
21. Kimble, D., Boex, J., & Kapitanova, G. (2012). Making decentralization work in developing Countries: Transforming local government entities into high-performing local government organizations(IDG Policy Brief). https://www.urban.org/sites/default/files/publication/26271/412710-Making-Decentralization-Work-in-Developing-Countries-Transforming-Local-Government-Entities-into-High-Performing-Organizations.PDF
22. Livingston, J., & Azfar, O. (2010). Federalist disciplines or local capture? An empirical analysis of decentralization i n U g a n d a . http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1019.7194&rep=rep1&type=pdf
23. Mohanty, A. R., & Mishra, B. R. (2017). Is fiscal policy pro-cyclical or counter-cyclical? Evidence from India. Arthshastra Indian Journal of Economics & Research, 6 (2),7–19 . https://doi.org/10.17010/aijer/2017/v6i2/114124
24. Musgrave ,R. (1969). Theories of fiscal federalism. Public Finance,24 (4) , 5 2 1 – 3 6 . https://econpapers.repec.org/article/pfipubfin/v_3a24_3ay_3a1969_3ai_3a4_3ap_3a521-36.htm.
25. Oates, W. (1972). Fiscal federalism. Harcourt Brace Jovanovich.
26. Otoo, I., & Danquah, M. (2021). Fiscal decentralization and efficiency of public services delivery by local governments in Ghana (WIDER Working Paper No .88) . UNU- WIDER . https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2021-88-fiscal-decentralization-efficiency-public-services-delivery-local-governments-Ghana.pdf
27. Pedroni, P. (2001). Fully modified OLS for heterogeneous cointegration panels. In B. H. Baltagi, T. B. Fomby, & R. Carter Hill (eds.), Nonstationary panels, panel cointegration, and dynamic panels (Advances in Econometrics, Vol.15 ,pp.93–130). Emerald Group Publishing Limited . https://doi.org/10.1016/S0731-9053(00)15004-2
28. Phillips, P. C. (1995). Fully modified least squares and vector autoregression. Econometrica, 63(5), 1023–1078. https://doi.org/10.2307/2171721
29. Rauf, A., Khan, A. A., Ali, S., Qureshi, G. Y., Ahmad, D., & Anwar, N. (2017). Fiscal decentralization and delivery of public services: Evidence from education sector in Pakistan. Studies in Business and Economics, 12(1), 174 – 184. https://doi.org/10.1515/sbe-2017-0013
30. Robalino, D. A., Picazo, O. F., & Voetberg, A. (2001). Does fiscal decentralization improve health outcomes? Evidence from a cross-country analysis(World Bank Policy Research Working Paper No. 2565). https://openknowledge.worldbank.org/handle/10986/19698
31. Saavedra, P. A. (2010). A study of the impact of decentralization on the access to service delivery(Dissertation). Georgia State University. https://scholarworks.gsu.edu/pmap_diss/40
32. Sow, M. & Razafimahefa, I. F. (2015). Fiscal decentralization and the efficiency of public service delivery(IMF Working Paper No. WP/15/59). https://www.imf.org/external/pubs/ft/wp/2015/wp1559.pdf
33. Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of Political Economy, 64(5), 416 – 424. https://www.jstor.org/stable/1826343