Economists and policy-makers are of the view that the Fiscal Decentralization is an effective strategy to promote economic growth. Thereby Economic Growth is seen as an objective of Fiscal Decentralization and efficiency in the allocation of resources in the public sector; This study analyzed the relationship between fiscal decentralization and economic growth for the first in Iran for the period 2001-2007 by use set of 28 provinces a panel data with Fixed Effect Models and Province and Time Dummies. We find that fiscal decentralization has a positive effect on Iran’s economic growth.
