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Author ORCID Identifier

https://orcid.org/0009-0003-6632-2117

Date Available

4-27-2026

Year of Publication

2026

Document Type

Doctoral Dissertation

Degree Name

Doctor of Philosophy (PhD)

College

Graduate School

Department/School/Program

Public Administration

Faculty

J.S. Butler

Faculty

Annelise Russell

Abstract

Economic development in Sub-Saharan Africa has been shaped by two transformative policy shifts: widespread fiscal decentralization reforms transferring revenue and expenditure authority to subnational governments, and the pursuit of foreign direct investment to supplement domestic capital. Despite the breadth of these reforms, their effectiveness in promoting sustainable economic development remains empirically contested. This dissertation examines three interconnected questions about fiscal governance and capital flows in Sub-Saharan Africa: what determines the extent to which governments decentralize fiscal authority; how county fiscal composition and revenue autonomy shape subnational economic performance; and how foreign direct investment interacts with domestic investment and growth.

The first essay investigates the determinants of fiscal decentralization across 45 Sub-Saharan African countries from 2000 to 2023, using fixed-effects panel regressions with five annual lags. The expenditure decentralization measure captures subnational fiscal autonomy using the narrow GFS definition — expenditure financed directly from subnational own resources — which produces lower averages than the broader subnational spending share. The results show that economic development is associated with greater expenditure centralization rather than decentralization, indicating that rising national income strengthens central administrative capacity in SSA rather than generating demand for subnational autonomy. Political stability is associated with revenue centralization. Institutional quality variables are not jointly significant. Colonial institutional legacies independently shape fiscal architecture, with French and Portuguese colonial histories associated with significantly lower revenue decentralization relative to former British colonies.

The second essay examines how revenue autonomy — the primary fiscal decentralization measure and county development expenditure composition jointly affect Gross County Product (GCP) across Kenya's 47 counties from 2013 to 2022, using a Dynamic Fixed Effects panel model with five annual lags. The revenue autonomy ratio, measuring county own-source revenue as a share of total county revenue, is negatively associated with GCP, reflecting Kenya's redistributive equitable share system and the short-run tax burden of own-source revenue mobilization. The development expenditure ratio, included as a fiscal composition control, is positively and significantly associated with county GCP in both the short run and the long run, confirming that how counties allocate their budgets matters alongside the degree of fiscal decentralization. Secondary school enrollment reinforces these effects, and a structural improvement in county economic performance is evident from 2019 to 2022.

The third essay examines the dynamic relationship between foreign direct investment and domestic investment across 48 Sub-Saharan African countries from 1990 to 2023, using a Panel Vector Autoregression framework with System-GMM estimation. Strong bidirectional feedback exists between foreign direct investment and economic growth. However, the relationship between foreign direct investment and domestic investment is weak and statistically insignificant in most specifications, indicating that foreign capital in Sub-Saharan Africa primarily functions as external financing rather than a catalyst for domestic capital formation. Domestic structural conditions, including financial sector development, institutional quality, and human capital, are more critical determinants of domestic investment than foreign direct investment inflows.

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2026.134

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