Political Accountability, Fiscal Conditions, and Local Government Performance â€“ Cross-Sectional Evidence from Indonesia
AbstractWhat makes governments tick? Why are some public institutions more successful than others in managing resources and delivering services? And even more vitally, how can malfunctioning institutions be reformed so that they perform their responsibilities more effectively? This paper contributes to our understanding of theses overarching questions by exploring the interactions between political institutions and public sector performance in the context of decentralization and local governance. It shows -both theoretically and empirically- that performance outcomes are determined by the extent to which people can hold their governments accountable through political institutions. The basic hypothesis underlying this research is that political accountability, either by encouraging sanctions upon non-compliant public agents or simply by reducing the informational gap regarding government activities, will create forceful incentives for elected officials and civil servants to reduce opportunistic behavior and improve performance. Using a cross-sectional regression the hypothesis is empirically tested against evidence from newly empowered local governments in Indonesia. The empirical findings broadly support our hypotheses. Improved public services on the ground, both in terms of quantity and quality, require informed and well functioning decision making processes that allocate resources to priority areas that meet the demand of the broader community.
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Bibliographic InfoPaper provided by Institute of Local Public Finance in its series Working Papers with number 02-2007.
Length: 31 pages
Date of creation: Feb 2007
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governance; public services; fiscal decentralization;
Find related papers by JEL classification:
- D2 - Microeconomics - - Production and Organizations
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-15 (All new papers)
- NEP-CDM-2008-03-15 (Collective Decision-Making)
- NEP-PBE-2008-03-15 (Public Economics)
- NEP-POL-2008-03-15 (Positive Political Economics)
- NEP-SEA-2008-03-15 (South East Asia)
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