The Relationship between Economic Growth and Financial Decentralization

Younessi, Ali

doi:10.30473/egdr.2024.68034.6718

Document Type : ORIGINAL ARTICLE

Author

Ali Younessi

Assistant professor of Econiomics, Payame Noor University, Tehran, Iran.

https://doi.org/10.30473/egdr.2024.68034.6718

Abstract

Financial decentralization is a multi-dimensional process in which some powers are transferred from the central government to the governors, and the most important thing is, the return of all the revenues of each province to the same province. One of the effects of financial decentralization is economic growth. Economic growth is measured through the difference in GDP. Economic growth in any country shows the economic and productive performance of each province, and the increase in the production of each province leads to the economic growth of the entire country. This study was conducted in order to investigate the relationship between economic growth and financial decentralization in the provinces of Iran, in which three cities and towns were selected as samples from each province. The technique used in this research is panel data. In this method, the data have time series and cross-sectional characteristics, consist of several dimensions and cover several periods. The time period of the research is 2018 to 2021. The equations related to the independent and dependent variables of this research are taken from the research model of Suyanto (2009), Langudi (2006) and Khosini (2006). The results of the research show that the increase in financial decentralization and the return of revenues from each province to the same province and even grants from the central government have a significant positive effect on economic growth. In addition, the research model shows that financial decentralization can improve public spending, reduce the population of low-income people, and ultimately improve the human capital index of provinces.

Keywords

Main Subjects

Human Capital

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The Relationship between Economic Growth and Financial Decentralization

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Volume 14, Issue 53January 2024Pages 156-143

Volume 14, Issue 53
January 2024
Pages 156-143