Fiscal decentralization and rural infrastructure development

Abstract

The fiscal decentralization in Myanmar continues to deteriorate and pose a challenge the long lasting for the growth in the longer time horizon. The main objective of this paper is to observe the fiscal decentralization and rural infrastructure development: evidence from Myanmar and examine whether fiscal decentralization effect directly or indirectly on infrastructure by using an econometric model for the period 2011-2018. This study examines the budget decentralization’s impact on infrastructure not only in the long run but also in the short run. The long and short run estimates are investigated using multiple regression method and fixed effects estimation method. Two variables including Revenue autonomy and the total number of miles of earth road construction were used in this analysis. The data was collected from the Ministry of Planning, Finance and Industry, Budget Department and the Department of Highways. Through the analysis findings show that Revenue autonomy positively causes the earth road construction. That’s why this observation concluded that earth road construction causes Revenue autonomy and Revenue autonomy causes the earth road construction. There is a bidirectional causal relationship in both the earth road construction variable and Revenue autonomy variable and exists a long run relationship between Revenue autonomy and the earth road construction from multiple regression method and fixed effects estimation method. Therefore, Revenue autonomy policy needs to be coordinated with each other for curbing the earth road construction.