Acta Universitatis Danubius. Œconomica, Vol 10, No 3 (2014)

Abstract

The current global drive towards devolution of financial resources and responsibilities has been increasingly justified on the basis that greater transfers of these financial resources and responsibilties to sub-central governments are theoretically expected to deliver greater economic efficiency in the provision of public goods and services and hence greater economic growth. There is a mixed result on these theoretical expectation across earlier empirical literatures. using the instrumental variables (IV) technique of analysis with the latest data from Nigeria for the period 1970-2013, this study found no robust significant effect of the decentralisation of spending or revenue on growth of real GDP per capital in Nigeria. The implication of this to the policy makers is that when it comes to the determinants of improved economic activities, decentralisation either fiscal expenditure or revenue side would not be instrumental to economic growth possibly because of existence of endemic corruption among politicians in Nigeria.