Does fiscal decentralisation hamper happiness? Evidence from African countries

Abstract

The Sustainable Development Goals prioritise the achievement of quality decentralisation through local taxation and sustainable local communities. This objective has been widely studied and a rich literature exists on the subject. In light of this, in this article we examine how fiscal decentralisation affects happiness in 27 African countries. We use a variety of methods to conduct our analysis, including Ordinary Least Squares (OLS), Driscoll-Kraay, Generalized Least Squares (GLS) whose robustness has been proven by the Lewbel 2SLS method, Method of Generalized Moments in the System (MMG-S) and Kinky Least Squares (KLS) for the period 2006–2019. The results show that fiscal decentralisation helps to increase happiness in Africa. Our recommendation is that governments should give priority to improving well-being by investing in public goods and services, promoting political stability and fighting corruption. In doing so, they can align themselves with the principles that make planned decentralisation beneficial to the people of Africa.