Do external grants to district governments discourage own-revenue generation?
Decentralization is expected to lead to greater efficiency in the allocation of public resources, as subnational governments are said to have better information than central government about the needs for and requirements of public services in their jurisdictions, especially in agricultural and rural areas, where information about rural residents' priorities is more limited. This purported benefit of decentralization rests strongly on the assumption that local governments can in fact exercise fiscal discretion to allocate resources.