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Fiscal Decentralization in Kenya: The Constituency Development Fund and the Growth of Government

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  • Bagaka, Obuya

Abstract

This paper explores the financial implications of fiscal decentralization policies on the central government's operating budget in Kenya. The paper evaluates how devolved funds under the constituency development fund (CDF) have been utilized to start healthcare capital projects (clinics) at the local level. The study finds that fiscal decentralization has promoted allocative efficiency and equity but at a cost of exporting tax burdens (operations and maintenance) to the central government emanating from capital projects implemented at the local level. The exported tax burdens have policy implications and call for reforms of the CDF program to reflect a benefit-expenditure structure.

Suggested Citation

  • Bagaka, Obuya, 2008. "Fiscal Decentralization in Kenya: The Constituency Development Fund and the Growth of Government," MPRA Paper 11813, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11813
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    References listed on IDEAS

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    1. Lindaman, Kara & Thurmaier, Kurt, 2002. "Beyond Efficiency and Economy: An Examination of Basic Needs and Fiscal Decentralization," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 915-934, July.
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    6. Vito Tanzi, 2000. "Policies, Institutions and the Dark Side of Economics," Books, Edward Elgar Publishing, number 1398.
    7. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9803, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Dennis A. Rondinelli & John R. Nellis, 1986. "Assessing Decentralization Policies in Developing Countries: The Case for Cautious Optimism1," Development Policy Review, Overseas Development Institute, vol. 4(1), pages 3-23, March.
    9. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    10. Sharma, Chanchal Kumar, 2004. "Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes," MPRA Paper 204, University Library of Munich, Germany, revised Nov 2005.
    11. Falleti, Tulia G., 2005. "A Sequential Theory of Decentralization: Latin American Cases in Comparative Perspective," American Political Science Review, Cambridge University Press, vol. 99(3), pages 327-346, August.
    12. Hood, Ron & Husband, David & Fei Yu, 2002. "Recurrent expenditure requirements of capital projects - estimation for budget purposes," Policy Research Working Paper Series 2938, The World Bank.
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    Cited by:

    1. Winnie V. Mitullah, 2012. "Decentralized Service Delivery in Nairobi and Mombasa," WIDER Working Paper Series wp-2012-092, World Institute for Development Economic Research (UNU-WIDER).
    2. UNDP Regional Bureau for Africa & Ayodele Odusola, "undated". "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Policy Notes 2017-08, United Nations Development Programme, Regional Bureau for Africa.
    3. Odusola, Ayodele, 2017. "Fiscal Policy, Redistribution and Inequality in Africa," UNDP Africa Reports 267032, United Nations Development Programme (UNDP).
    4. repec:rac:ecchap:2017-08 is not listed on IDEAS
    5. Mitullah, Winnie V., 2012. "Decentralized Service Delivery in Nairobi and Mombasa," WIDER Working Paper Series 092, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    fiscal decentralization; budget; devolution; constituency development fund; health care; allocative efficiency;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H0 - Public Economics - - General
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • A10 - General Economics and Teaching - - General Economics - - - General

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