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This paper focuses on the evolving pattern of fiscal decentralization and its impact on the growth of per capita GDP of the districts in Nepal. The dependent variable is the growth of the per capita district agricultural GDP, which is, used as a proxy for the annual growth of per capita district GDP growth. The revenue and expenditure indices have been used as the fiscal decentralization variables. The paper also uses a dummy variable for the Local Self Governance Act (LSGA) as a fiscal decentralization variable. From the various regressions, it is found that fiscal decentralization has positively influenced the per capita district GDP growth. The coefficient of fiscal decentralization variables and dummy variable for the LSGA are statistically significant and positive. The relationship is robust. It is conclude that, ceteris paribus, fiscal decentralization is supportive to district per capita GDP growth in Nepal.


International Center for Public Policy Working Paper Series #1420, Andrew Young School of Policy Studies, Georgia State University

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