Fiscal decentralization boosts government quality, political decentralization hinders progress.
The study looked at how giving more power to local governments affects the quality of government services. They found that when local governments have more control over their finances, the quality of government services improves. However, when local governments also have more control over political decisions, it can reduce the positive impact of financial control on government quality. This negative effect of political control on government quality is less of a problem in countries with a long history of having their own government.