As part of USAID's Fiscal Reform Project, the Andrew Young School was tasked to develop a number of policy-oriented research studies, including studies on fiscal policy and corruption (2004) as well on as fiscal decentralization and poverty reduction (2005).

The study Fighting poverty through fiscal decentralization by Jamie Boex, Eunice Heredia-Ortiz, Jorge Martinez-Vazquez, Andrey Timofeev and Guevera Yao, brings together the current state of knowledge of how fiscal decentralization –including the assignment of expenditure responsibilities, the assignment of revenue sources to subnational governments, intergovernmental fiscal transfers, and local government borrowing- effects poverty levels. Based on a better understanding how these two thematic areas intersect, the study provides specific suggestions and recommendations how development agencies and international financial institutions can support fiscal decentralization reforms in a more pro-poor manner.

Fiscal decentralization is an important reform theme in many –if not most- developing and transition countries. The goal of many decentralization reforms is to empower local communities through their local governments; to provide a more equitable allocation of resources; and to assure improvement in the delivery of key services, such as education and health care. In the context of lesser developed economies, assuring equity –in the form of policies designed to alleviate poverty- take on even greater urgency.

Yet, despite the obvious importance of the topic, relatively little is known about the overall impact of fiscal decentralization policies on poverty reduction. In many ways, the decentralization literature has not seriously tackled the issue of poverty. Likewise, the poverty literature has largely ignored the role that local governments and decentralization play in poverty reduction strategies.

Chapter Outline
 
Chapter 1. Introduction: Fiscal decentralization and poverty reduction
Chapter 2. Fiscal Decentralization and Poverty: Concepts, Measurement Issues, and the Available Empirical Evidence
Chapter 3. Poverty Reduction and the Assignment of Expenditure Responsibilities
Chapter 4. Poverty Reduction and Revenue Assignments
Chapter 5. Poverty Reduction and Intergovernmental Grants
Chapter 6. Poverty Reduction and Local Government Borrowing
Chapter 7. Conclusions and Lessons