Dissertation Title: THE IMPACT OF DECENTRALIZATION ON LOCAL GOVERNMENT FINANCIAL MANAGEMENT  

• Author: Mariel FRROKU

• Institution: University of Tirana,  Faculty of Economics, Department of Finance

• Field of study: Finance

• Publication date: 07.01.2026

• The dissertation is published in Albanian.

© Copyright: Mariel FRROKU

Published by the University of Tirana
Based on legal acts, regulations and policies of the UT

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Abstract 

Decentralization as the most important strategic vision within the framework of public policies in a democratic governance, has a direct impact on the quality of public financial management of local government. The fiscal autonomy that local government ensures in decision-making, the fiscal importance within the framework of general governance and the improvement of the index that measures the degree of decentralization, are theoretical forms that measure the level of quality of public policies within the framework of local government. 

The history of reforms in general, and in particular the 2015 administrative-territorial reform in our country, has served as an important basis for the methodological and empirical study of the impact of decentralization on improving public financial management at the local level. The definition of strategic policies, structural and functional changes and the legal consolidation of financial management were the main pillars of the measures undertaken in Albania in the framework of strengthening local government. 

In local government, ten years after this reform, it is empirically proven that the reforms undertaken have yielded positive effects, but with considerable challenges for a qualitative future of public services. Despite the improvement of national fiscal indicators and the inclusion of all local self-government units in the financial management cycle, they are facing challenges of inequality between units and also high political influence with direct risk on the quality of financial management at the local level. Based on these findings, the study provides scientific recommendations for strategic interventions of decentralization and the qualitative improvement of the current implementation of public financial management methodologies based on performance at the local level. 

Field: 

Public Financial Management in Local Government 

 

Keywords:   

Local Government, Public Finance, Fiscal Federalization, Decentralization, Fiscal Autonomy, Fiscal Importance 

 

Extended  

Decentralization as the most important strategic vision within the framework of public policies in a democratic governance, has a direct impact on the quality of public financial management of local government. The fiscal autonomy that local government ensures in decision-making, the fiscal importance within the framework of general governance and the improvement of the index that measures the degree of decentralization are theoretical forms that measure the level of quality of public policies within the framework of local government. 

The history of reforms as a whole, and more fundamentally the 2015 administrative-territorial reform of Albania, have served as an important basis for the methodological and empirical study of the impact of decentralization on improving public financial management at the local level. The definition of strategic policies, structural functional changes and legal consolidation of financial management were the main pillars of the measures undertaken in Albania within the framework of strengthening local government. 

In local government, 10 years after this reform, it is empirically proven that the reforms undertaken have yielded positive effects, but with considerable challenges for the qualitative future of public services. Despite the improvement of national fiscal indicators and the inclusion of all local self-government units in the financial management cycle, they are facing challenges of inequality between units and also high political impact with direct risk on the quality of financial management at the local level. Based on these findings, the study provides scientific recommendations for strategic decentralization interventions and the qualitative improvement of the current implementation of public financial management methodologies at the local level based on performance. 

Field of study: 

Public Finance Management on Local Government 

Keywords:  

Local Government, Public Finance, Fiscal Federalization, Decentralization, Fiscal Autonomy, Fiscal Stability