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


  • Matsui, Kazuhisa


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.

Suggested Citation

  • Matsui, Kazuhisa, 2005. "Post-decentralization regional economies and actors -- putting the capacity of Local governments to the test," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 43(1), pages 171-189, March.
  • Handle: RePEc:jet:deveco:v:43:y:2005:i:1:p:171-189

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    References listed on IDEAS

    1. Stephen Marks, 2002. "Ntt Sandalwood: Roots Of Disaster," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 223-240.
    2. repec:lpe:efijnl:200306 is not listed on IDEAS
    3. 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.
    4. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Other Operational Studies 14632, The World Bank.
    5. 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.
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    Cited by:

    1. repec:uii:journl:v:6:y:2014:i:2:p:106-118 is not listed on IDEAS
    2. Catherine Rodríguez & Patricia Meirelles, 2010. "Devolution and Accountability Effects in the Public Provision of Water Services in Indonesia," DOCUMENTOS CEDE 007905, UNIVERSIDAD DE LOS ANDES-CEDE.
    3. Landiyanto, Erlangga Agustino, 2015. "Transformation of the national monitoring and evaluation arrangement in decentralized Indonesia," MPRA Paper 69073, University Library of Munich, Germany.
    4. repec:uii:journl:v:7:y:2015:i:1:p:1-11 is not listed on IDEAS

    More about this item


    Decentralization; Local economy; Community development; Regional administration; Local government; Indonesia; 地方分権; 地域経済; 地域開発; 地方行政; 地方自治; インドネシア;

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics


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