Government of Pakistan has undertaken two major developments by signing the 7 National Finance Commission (NFC) award and by passing 18 th Constitutional Amendment. These developments would cause a fundamental shift in the division of powers between the centre and the provinces. The latter would have more autonomy in performing various functions like the provision of public goods and services, and macroeconomic management. Since role of democratic institutions in explaining growth effects of fiscal decentralization is very imperative thus it is a big question that if Pakistan, with a weak institutional framework, attain its objective of bringing prosperity to Pakistani people through fiscal decentralization (FD).