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Electoral accountability, fiscal decentralization and service delivery in Indonesia

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  • Skoufias, Emmanuel
  • Narayan, Ambar
  • Dasgupta, Basab
  • Kaiser, Kai

Abstract

This paper takes advantage of the exogenous phasing of direct elections in districts and applies the double difference estimator to: (i) measure impacts on the pattern of public spending and revenue generation at the district level; and (ii) investigate the heterogeneity of the impacts on public spending. The authors confirm that the electoral reforms had positive effects on district expenditures and these effects were mainly due to the increases in expenditures in the districts outside Java and Bali and the changes in expenditures brought about by non-incumbents elected in the districts. Electoral reforms also led to higher revenue generation from own sources and to higher budget surplus. Finally, the analysis finds that in anticipation of the forthcoming direct elections, district governments tend to have higher current expenditures on public works.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5614.

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Date of creation: 01 Mar 2011
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Handle: RePEc:wbk:wbrwps:5614

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Keywords: Subnational Economic Development; Public Sector Expenditure Policy; Parliamentary Government; E-Government; Debt Markets;

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References

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  1. Lederman, Daniel & Loayza, Norman & Reis Soares, Rodrigo, 2001. "Accountability and corruption : political institutions matter," Policy Research Working Paper Series 2708, The World Bank.
  2. Fitria Fitrani & Bert Hofman & Kai Kaiser, 2005. "Unity in diversity? The creation of new local governments in a decentralising Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(1), pages 57-79.
  3. Temple, Jonathan, 2001. "Growing into Trouble: Indonesia After 1966," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2932, C.E.P.R. Discussion Papers.
  4. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer, Springer, vol. 30(2), pages 222-239, June.
  5. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, Elsevier, vol. 88(3-4), pages 867-893, March.
  6. Zhang, Xiaobo & Fan, Shenggen & Zhang, Linxiu & Huang, Jikun, 2001. "Local Governance And Public Goods Provision," 2001 Annual meeting, August 5-8, Chicago, IL, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20570, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Hofman, Bert & Kadjatmiko & Kaiser, Kai & Suharnoko Sjahrir, Bambang, 2006. "Evaluating fiscal equalization in Indonesia," Policy Research Working Paper Series 3911, The World Bank.
  8. Khemani, Stuti, 2004. "Political cycles in a developing economy: effect of elections in the Indian States," Journal of Development Economics, Elsevier, Elsevier, vol. 73(1), pages 125-154, February.
  9. Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199548477, October.
  10. Ahmad, Junaid & Devarajan, Shantayanan & Khemani, Stuti & Shah, Shekhar, 2005. "Decentralization and service delivery," Policy Research Working Paper Series 3603, The World Bank.
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Citations

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Cited by:
  1. Skoufias, Emmanuel & Olivieri, Sergio, 2013. "Sources of spatial welfare disparities in Indonesia: Household endowments or returns?," Journal of Asian Economics, Elsevier, Elsevier, vol. 29(C), pages 62-79.
  2. Monica Martinez-Bravo, 2014. "The Role of Local Officials in New Democracies: Evidence from Indonesia," American Economic Review, American Economic Association, American Economic Association, vol. 104(4), pages 1244-87, April.
  3. Moricz, Sara & Sjöholm, Fredrik, 2014. "The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia," Working Paper Series, Research Institute of Industrial Economics 1023, Research Institute of Industrial Economics.
  4. Krisztina Kis-Katos & Bambang Suharnoko Sjahrir, 2014. "The impact of fiscal and political decentralization on local public investments in Indonesia," Discussion Paper Series, Department of International Economic Policy, University of Freiburg 25, Department of International Economic Policy, University of Freiburg, revised Jan 2014.

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