| Abstract: | This article addresses the issue of fiscal decentralizationin developing countries, and the use of intergovernmental transfersto achieve this objective. We find that developing countrieshave more centralized fiscal structures and argue that thisis consistent with the theory of fiscal federalism. Economicdevelopment, however, does push the advantage toward decentralization.We also show that developing countries use a wide variety oftransfer instruments to fund local governments, and that theseinstruments give the national government varying degrees ofcontrol over local government finances. |
