Does Fiscal Decentralization Deliver an Equity Dividend? Inconclusive Evidence from Morocco’s Regions

Abstract

Although often presented as a lever for equity, fiscal decentralization has not yet been related directly to household poverty in a unitary middle-income state with equalization funds. This article asks: is the regional distribution of territorial-authority expenditure and revenue associated with a reduction in multidimensional poverty across Morocco’s twelve regions? It is measured by the expenditure decentralization index (IDFD) and the revenue decentralization index (IDFR), each region’s share of the national total. Poverty is measured by the multidimensional poverty rate (IPM) of the High Commission for Planning (HCP) in 2014 and 2024. The primary test, suited to twelve observations, relates ten-year changes; an annual panel on household consumption complements it. The IDFD coefficient is negative (−0.48 poverty points per standard deviation; 95% confidence interval: −1.00 to 0.03) but unstable across specifications, the IDFR coefficient is never significant, and the panel shows no favourable association with consumption. The evidence is inconclusive: it neither confirms nor rules out an economically large effect. Equalization and administrative capacity are avenues for research, not conclusions.

JEL Classification: H71, H75, H77, I32, R11, C21, C23.

Paper type: Empirical Research.