The paper investigates the effect of subnational fiscal allocations on local development in Cambodia, mapping challenges as well as achievements with respect to fiscal decentralization. By using a mixed-methods approach, combining quantitative data analysis with qualitative case studies, this paper shows that effective financial management at the commune and provincial levels significantly improves infrastructure, health, and education outputs. While such performances are impressive, the gaps in resources and community involvement still indicate that the improvements required in the level of local governance can be effected through participatory budgeting by looking at the responsiveness of the budget to the needs of the community, the addition of value to sustainable development, and the contribution toward improved quality of life of the citizens.
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