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Corruption and local democratization in Indonesia: The role of Islamic parties

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  • Henderson, J. Vernon
  • Kuncoro, Ari

Abstract

Indonesia has a tradition of corruption among local officials who harass and collect bribes from firms. This paper examines whether corruption is affected by local democratization and by the party composition of local assemblies. Democratization occurred in 1999 and decentralization in 2001. We have firm-level data for 2001 and 2004. The 2001 data benchmark corruption at the time of decentralization. We find that corruption declines between 2001 and 2004 overall, but much less so in districts with more secular party as opposed to Islamic party representatives in district assemblies. For a larger sample of districts, correspondingly, we find that corruption in 2004 is more in districts which voted more in favor of secular party representatives in the first elections in 1999. We argue that the effects seem to be causal, over above any effects of changing religiosity and economic circumstances across districts.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 94 (2011)
Issue (Month): 2 (March)
Pages: 164-180

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Handle: RePEc:eee:deveco:v:94:y:2011:i:2:p:164-180

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Corruption Political economy Democratization Islamic parties;

References

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  13. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
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Cited by:
  1. Akarca, Ali T. & Tansel, Aysit, 2012. "Turkish voter response to government incompetence and corruption related to the 1999 earthquakes," MPRA Paper 35894, University Library of Munich, Germany.
  2. Bhalotra, Sonia & Clots-Figueras, Irma & Cassan, Guilhem & Iyer, Lakshmi, 2014. "Religion, politician identity and development outcomes: Evidence from India," Journal of Economic Behavior & Organization, Elsevier, vol. 104(C), pages 4-17.
  3. Julien Hanoteau & Virginie Vial, 2014. "Institutions, corruption and entrepreneurship: Indonesian evidences," EcoMod2014 6689, EcoMod.
  4. Sonia Bhalotra & Irma Clots-Figueras & Guilhem Cassan & Lakshmi Iyer, 2013. "Religion, Politician Identity and Development Outcomes: Evidence from India," NBER Chapters, in: Economics of Religion and Culture National Bureau of Economic Research, Inc.

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