Effects of Fiscal Decentralization on Poverty Eradication in Egypt

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue V, May 2022 | ISSN 2454–6186

Effects of Fiscal Decentralization on Poverty Eradication in Egypt

Mahmoud Anber (PhD)
Department of Economics Faculty of Commerce, Aswan University, Edfu.Sabaia City, Egypt

Abstract-It is generally assumed that by bringing decision-making about the provision of public goods and services closer to citizens, decentralization allows poor people to voice themselves more clearly, facilitates communication and information flows between local policy-makers and their constituents, and fosters improved accountability The main objective of this study was to analyze the effects of fiscal decentralization on poverty eradication in Egypt. The study objectives included (i) Analyze the effects of revenue decentralization on poverty Head count in Egypt.
(ii)Analyze the effects of expenditure decentralization on poverty reduction in Egypt.
The Cross-Governorates panel data from 2018 – 2020 was used. The published data was from government agencies, United Nation Development Programme and World Bank used. Various empirical models were estimated to find out the effects of Governorates own-source revenue and Governorates expenditure on poverty reduction in Egypt. The study established that as the share of own local revenue of sub-national government in total revenue increases, poverty levels decline. Own-source revenue was found to reduce poverty at low levels below 54.37 per cent after which further increase in own source revenue would increase poverty head count. Arising from the study findings, it is important for Governorates governments to have adequate own-source revenue to finance their expenditure as opposed to relying on intergovernmental transfers from national government. The revenue dimension of fiscal decentralization has a strong bearing on the ability of and incentives faced by local government to address basic service delivery needs. Further the study established that an increase in the share of Governorates expenditure will initially increase poverty but beyond a certain threshold it will work to reduce poverty. The researcher recommended that the national government should support and encourage Governorates governments to enhance their own-source revenue to finance their expenditure as opposed to depending on intergovernmental transfers. Governorates government need to prioritize health care needs as an effort to improve poverty reduction outcomes and human development

Key word: Fiscal decentralization, Poverty eradication

I.INTRODUCTION

Egypt is one of the few Countries in Africa to have reversed economic decline and to have begun implementing measures for poverty eradication. A number of important studies and think-pieces (among others, see [1] have underlined that decentralization, in and of itself, is not synonymous with poverty reduction – and that a wide range of “external” factors (e.g. central government’s political commitment to poverty reduction, overall literacy rates, the

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