Is Fiscal Decentralisation a Development Elixir? A Comparative Analysis of Kenya and China

Mr. Ezekiel Atetwe

This paper explores the highly debated issue of whether fiscal decentralisation is a panacea to economic development problems in China and Kenya. China has a strong history of fiscal decentralisation characterized by a centralized political system. On the other side, Kenya with a unitary democratic political system has a nascent fiscal decentralisation system with its institutionalisation strongly taking roots. This paper analyses the successes and challenges of China’s fiscal decentralisation and identifies opportunities that can be utilised by the Kenyan system to minimize on the ramifications associated with fiscal decentralisation implementation. On doing so, this paper greatly avoids the rhetoric of best practice and candidly focuses on gray areas in fiscal decentralisation that can be improved by the Kenya’s system. The comparative analysis is based on the components of effective fiscal decentralisation identified from literature review. This paper explores the implementation of these components in China and Kenya. It also discusses challenges facing fiscal decentralisation in Kenya and China. Whether these challenges make fiscal decentralisation a less effective medicine for development in China and Kenya is a question explored in depth.
Keywords: China, Kenya, fiscal decentralisation, economic development