THE IMPACT OF LOCAL GOVERNMENT AUTONOMY ON LOCAL ECONOMIC GROWTH, DEVELOPMENT, AND FISCAL SUSTAINABILITY

Abstract

This study examines how fiscal, administrative, and political autonomy influence economic growth, human development, and fiscal sustainability across 82 LGUs from 2010–2023 using mixed methods. Results from fixed-effects, instrumental variable, and dynamic panel models show that greater fiscal autonomy particularly own-source revenue capacity drives stronger growth, higher HDI, and improved fiscal health, with effects persisting over time. Qualitative insights reveal autonomy enables targeted investments and responsive services, though gains are uneven due to capacity gaps, political interference, and central transfer reliance. Findings suggest well-structured decentralization, supported by institutional capacity and accountability, can foster sustainable and equitable local development.