Fiscal Decentralization and Local Economic Development: A Case Study of the Builsa North District, Ghana

Abstract

Local Economic Development (LED) is increasingly gaining the attention of governments especially in developing countries. In Ghana, LED has been adopted as a development strategy to enable local governments in partnership with community groups and private sector create employment and boost local development using the resources available. The study has investigated the degree to which Fiscal Decentralization (FD) has contributed to LED at the district level. Using qualitative research method, the study found that, fiscal decentralization thus facilitates LED but with minimal effects. The district has a very low IGF base resulting in its heavy reliance on central government, which undermines its fiscal autonomy. Local economic development of the district is largely dependent on the interventions of central government and donor supports and rarely could provide basic services for the people with its own sources of funds. The study has contributed to the understanding of the theoretical link between FD and LED and recommended that more research is needed from different approaches to identify the best strategies to increase local revenue and expenditure autonomy without causing negative developmental consequences.