The Effect of Fiscal Decentralization on Economic Growth in Various Provinces of Iran (A Spatial Econometric Approach)

In the economic literature، theories of fiscal decentralization have been taken into consideration in order to increase efficiency and productivity of the public sector and regional balance. Establishing provincial revenue – expenditure system and founding administrative and financial institutions in all provinces during the third and fourth development plans some great steps were taken towards fiscal decentralization in Iran. In this paper، we evaluate the impact of fiscal decentralization on economic growth with two index of fiscal decentralization (revenue decentralization and national expenditure decentralization) by using spatial econometric methods. The results show that there is linear positive relation between fiscal decentralization and provincial economic growth. Spatial dependence variable significance reflects the positive effects of economic growth in the region through overflow.