Ethiopia Public Finance Review (PFR) is an analytical input to the regular Government-Donor dialogue on public finance and aid effectiveness. It forms the basis for policy focused analyses and sustained dialogue that facilitate close partnership and enhanced mutual accountability between Government and the development partners. The PFR is also an important instrument for determining the level and quality of aid and it fulfills a due diligence requirement for operations like the Protection of Basic Services. The 2010 PFR analyzes the effectiveness of decentralized service delivery in Ethiopia. While the Government of Ethiopia (GoE) has pursued decentralization for the last two decades, neither a comprehensive documentation of the functioning of the system nor a thorough evaluation of its effectiveness is available. This study attempts to fill this gap by linking policy and institutional variables related to decentralization with service delivery outcomes at the sub-national level.