Democratic Reform and the Transition to Market Economy in Africa

Wake Forest University, Winston Salem NC

Investigators

Abstract

This research examines the relationship between fiscal decentralization and economic policy reforms among a small sample of countries in Africa. The first objective is to conduct a spectral analysis of the decentralization process in four countries on the basis of selected indicators of fiscal decentralization. This allows a ranking of each country's reform process on a spectral continuum between the two extremes of absolute centralization and absolute decentralization. The second objective is to conduct an empirical test of the relationship between decentralization and central government fiscal position, using a non-parametric approach to analyze correlations between and among the decentralization and macroeconomic indicators. The hypothesis to be tested is that if fiscal decentralization is enacted in the context of a strong, transparent, and credible institutional and political framework, fiscal decentralization need not undermine reforms at the national level. The results of this research will enable the development of a larger research proposal that considers data and empirical models that capture the effects of decentralization on the fiscal position of central government for a larger sample of countries in Africa