Fiscal decentralization and poverty: A cross-sectional analysis and a case study of Egypt

This study analyzes the relationship between fiscal decentralization and poverty. In addition to exploring the theoretical foundations of this relationship, there is a cross-sectional analysis of a dataset that covers 52 countries over the period from 1970 to 2002. The empirical analysis results suggest a quadratic relationship between fiscal decentralization and poverty. This finding is valid for developing and in-transition countries, but not for developed countries, which exhibits a negative linear relationship between fiscal decentralization and poverty incidence. This study also uses Egypt as a case study to explore the role that fiscal decentralization may play to reduce poverty in specific context. To achieve this purpose, this study develops a proposal to introduce fiscal decentralization to Egypt as an integrated component of the ongoing process of economic and state reform. In the context of analyzing poverty reduction policies and the characteristics of the poor in Egypt, this study assesses how fiscal decentralization may contribute to poverty reduction efforts in contemporary Egypt.