Post-decentralization regional economies and actors -- putting the capacity of Local governments to the test

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Post-decentralization regional economies and actors -- putting the capacity of Local governments to the test

Author Info

Matsui, Kazuhisa

Abstract

Decentralization in Indonesia was introduced institutionally in 2001, with a democratization drive promoted by international donors and by the intention of the new government to clear away the centralistic image of Soeharto. Decentralization has had some effects on regional economies and on local government administration. Compared to the period before decentralization, the share of gross regional domestic product and local government finance has increased in Java, though investment and bank borrowing have expanded to the outer islands. In qualitative aspects, decentralization has transferred not only administrative authority but also many new vested interests from the center to regions. Local governments have become more extensive economic actors in regional economies. Regional economic actors now compete actively for such vested interests and have missed the opportunity to create market-friendly regional economies. The government sector should not be a mere rent-seeking economic actor, but should play a role as a facilitator promoting private sector activities in regional economies.

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Publisher Info
Article provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its journal The Developing Economies.

Volume (Year): 43 (2005)
Issue (Month): 1 (March)
Pages: 171-189
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Handle: RePEc:jet:deveco:v:43:y:2005:i:1:p:171-189

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Find related papers by JEL classification:
R1 - Urban, Rural, and Regional Economics - - General Regional Economics

References listed on IDEAS
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Lewis, Blane D., 2003. "Local Government Borrowing and Repayment in Indonesia: Does Fiscal Capacity Matter?," World Development, Elsevier, vol. 31(6), pages 1047-1063, June. [Downloadable!] (restricted)
Casson, Anne & Obidzinski, Krystof, 2002. "From New Order to Regional Autonomy: Shifting Dynamics of "Illegal" Logging in Kalimantan, Indonesia," World Development, Elsevier, vol. 30(12), pages 2133-2151, December. [Downloadable!] (restricted)
Stephen V. Marks, 2002. "Ntt Sandalwood: Roots Of Disaster," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 38(2), pages 223-240, August. [Downloadable!] (restricted)

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