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Unity in diversity? The creation of new local governments in a decentralising Indonesia

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  • Fitria Fitrani
  • Bert Hofman
  • Kai Kaiser

Abstract

This paper evaluates the proliferation of local governments concurrent with Indo-nesia's 2001 decentralisation. Largely static for decades under the New Order, the number of municipalities (kota) and districts (kabupaten) has increased by half, from 292 before decentralisation to 434 in 2003. Most of the increase is off-Java. This represents a fundamental change in Indonesia's subnational administrative, political and fiscal landscape. We present a new dataset that elucidates the characteristics of these new kota and kabupaten, and review political, fiscal and economic incentives for creating new jurisdictions. We find that geographic dispersion, political and ethnic diversity, natural resource wealth and scope for bureaucratic rent seeking all influence the likelihood of regional splits. Since jurisdictional changes will affect local governance and service delivery, we stress the importance of providing an effective institutional framework for the creation - or future amalgamation - of local governments as part of a strategic approach to consolidating Indonesia's decentralisation.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Bulletin of Indonesian Economic Studies.

Volume (Year): 41 (2005)
Issue (Month): 1 ()
Pages: 57-79

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Handle: RePEc:taf:bindes:v:41:y:2005:i:1:p:57-79

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References

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  1. Alberto Alesina & Arnaud Devleeschauwer & William Easterly & Sergio Kurlat & Romain Wacziarg, 2003. "Fractionalization," NBER Working Papers 9411, National Bureau of Economic Research, Inc.
  2. Hofman, Bert & Kadjatmiko & Kaiser, Kai & Suharnoko Sjahrir, Bambang, 2006. "Evaluating fiscal equalization in Indonesia," Policy Research Working Paper Series 3911, The World Bank.
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Citations

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Cited by:
  1. Bert Hofmann & Kai Kaiser & Günther G. Schulze, 2004. "Dezentralisierung und Korruption: erste Erfahrungen aus Indonesien," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(2), pages 226-246.
  2. Fadliya & Ross H. McLeod, 2010. "Fiscal Transfers to Regional Governments in Indonesia," Departmental Working Papers 2010-14, The Australian National University, Arndt-Corden Department of Economics.
  3. Winters, Matthew S. & Karim, Abdul Gaffar & Martawardaya, Berly, 2014. "Public Service Provision under Conditions of Insufficient Citizen Demand: Insights from the Urban Sanitation Sector in Indonesia," World Development, Elsevier, vol. 60(C), pages 31-42.
  4. Kis-Katos, Krisztina & Sjahrir, Bambang Suharnoko, 2014. "The Impact of Fiscal and Political Decentralization on Local Public Investments in Indonesia," IZA Discussion Papers 7884, Institute for the Study of Labor (IZA).
  5. Skoufias, Emmanuel & Narayan, Ambar & Dasgupta, Basab & Kaiser, Kai, 2011. "Electoral accountability, fiscal decentralization and service delivery in Indonesia," Policy Research Working Paper Series 5614, The World Bank.
  6. Aloysius Gunadi, Brata, 2007. "Spatial Concentration of the Informal Small and Cottage Industry in Indonesia," MPRA Paper 12622, University Library of Munich, Germany, revised 2008.
  7. Kent Eaton & Kai Kaiser & Paul J. Smoke, 2011. "The Political Economy of Decentralization Reforms : Implications for Aid Effectiveness," World Bank Publications, The World Bank, number 2336.
  8. Aloysius Gunadi, Brata, 2008. "Pemekaran Daerah di Papua: Kesejahteraan Masyarakat vs. Kepentingan Elit
    [The Creation of New Regions in Papua: Social Welfare vs. Elite's Interests]
    ," MPRA Paper 13277, University Library of Munich, Germany.
  9. Kis-Katos, Krisztina & Sparrow, Robert, 2013. "Poverty, Labour Markets and Trade Liberalization in Indonesia," IZA Discussion Papers 7645, Institute for the Study of Labor (IZA).
  10. Moricz, Sara & Sjöholm, Fredrik, 2014. "The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia," Working Papers 2014:15, Lund University, Department of Economics.
  11. Chavis, Larry, 2010. "Decentralizing development: Allocating public goods via competition," Journal of Development Economics, Elsevier, vol. 93(2), pages 264-274, November.
  12. Aswicahyono, Haryo & Bird, Kelly & Hill, Hal, 2009. "Making Economic Policy in Weak, Democratic, Post-crisis States: An Indonesian Case Study," World Development, Elsevier, vol. 37(2), pages 354-370, February.
  13. Aloysius Gunadi, Brata, 2008. "Creating New Regions, Improving Regional Welfare Equality?," MPRA Paper 12540, University Library of Munich, Germany.
  14. James CUST & Ridwan D. RUSLI, 2014. "The economic spillovers from resource extraction: a partial resource blessing at the subnational level?," Economic Growth centre Working Paper Series 1402, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
  15. Comola, Margherita & de Mello, Luiz, 2010. "Fiscal Decentralization and Urbanization in Indonesia," Working Paper Series wp2010-58, World Institute for Development Economic Research (UNU-WIDER).
  16. Grimm, Michael & Sparrow, Robert & Tasciotti, Luca, 2014. "Does Electrification Spur the Fertility Transition? Evidence from Indonesia," IZA Discussion Papers 8146, Institute for the Study of Labor (IZA).
  17. Hofman, Bert & Kadjatmiko & Kaiser, Kai & Suharnoko Sjahrir, Bambang, 2006. "Evaluating fiscal equalization in Indonesia," Policy Research Working Paper Series 3911, The World Bank.
  18. Skoufias, Emmanuel & Narayan, Ambar & Dasgupta, Basab & Kaiser, Kai, 2014. "Electoral accountability and local government spending in Indonesia," Policy Research Working Paper Series 6782, The World Bank.
  19. Aloysius Gunadi Brata & Henri L.F. de Groot & Piet Rietveld, 2013. "Dynamics in Aceh and North Sumatera after the Twin Disasters," Tinbergen Institute Discussion Papers 13-115/VIII, Tinbergen Institute.

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