Fiscal decentralization and regional economic growth: Theory, empirical studies, and Russian experience

The article deals with the theoretical and empirical relationship between fiscal decentralization and economic growth. Empirical analysis of Russian regions for 2005-2012 shows that excessive expenditure decentralization within the region, which is not accompanied by the respective level of revenue decentralization, is significantly and negatively related to regional economic growth. On the contrary, regional dependence on intergovernmental fiscal transfers from the federal center is positively associated with economic growth.