The growth impact of intersectoral and intergovernmental allocation of public expenditure: With applications to China and India

The negative association between fiscal decentralization and provincial economic growth has been found to be consistently significant and robust in China. For India, however, we have found that fiscal decentralization is positively, and even statistically significantly, associated with state economic growth. The state allocation of public spending in various sectors is broadly consistent with ¡°growth maximizing,¡± whereas increases in the central allocation of its budget among development projects, nondevelopment projects, and social and community services by cutting the center's spending on all other functions can promote regional growth.