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Indonesian Intergovernmental Performance Grants: An Empirical Assessment of Impact

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  • Blane D. Lewis

Abstract

The government of Indonesia has now piloted two different output-based performance grants to regions. One focuses on increasing the amount and quality of local government capital spending. The other provides incentives for local governments to augment equity investments in their water enterprises and for the enterprises to use those investments to increase the number of household water connections to the poor. Impact evaluations of the two grants suggest some reasonably positive outcomes against the stated objectives. While the assessed impacts may not match the expected outputs (as argued by many performance grant enthusiasts), these impacts provide a plausible basis for the sustained development and use of such grants. The alternative would be to continue to rely exclusively on the equity-based approaches that have dominated intergovernmental fiscal relations in Indonesia and have led to rather weak local public service outcomes.

Suggested Citation

  • Blane D. Lewis, 2014. "Indonesian Intergovernmental Performance Grants: An Empirical Assessment of Impact," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(3), pages 415-433, December.
    • Handle: RePEc:taf:bindes:v:50:y:2014:i:3:p:415-433
    DOI: 10.1080/00074918.2014.980378
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    Cited by:

    1. Takahiro Akita & Awaludin Aji Riadi & Ali Rizal, 2019. "Fiscal Disparities in Indonesia under Decentralization: To What Extent Has General Allocation Grant(DAU) Equalized Fiscal Revenues?," Working Papers EMS_2019_05, Research Institute, International University of Japan.
    2. Rus’an Nasrudin, 2016. "The Impact of Lagging-Region Status on District Poverty in Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 62, pages 30-43, April.
    3. Patrice Ollivaud, 2017. "Improving the allocation and efficiency of public spending in Indonesia," OECD Economics Department Working Papers 1381, OECD Publishing.

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