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Assessing Local Government Efficiency: Evidence from Sumatra, Indonesia

Author

Listed:
  • Rambe, Roosemarina Anggraini

    (Department of Economic Development, University of Bengkulu, Indonesia)

  • Wibowo, Kodrat

    (Indonesia Competition Commission)

  • Febriani, Ratu Eva

    (Department of Economic Development, University of Bengkulu, Indonesia)

  • -, Septriani

    (Department of Economic Development, University of Bengkulu, Indonesia)

Abstract

The purposes of this research were to assess the relative efficiency of local governmentspending in Sumatra, Indonesia and to analyze the determinants of this efficiency. Data Envelopment Analysis (DEA) and multiple regression were employed for a data setof the spending of 154 local governmentsin 2016. Three inputs were used to measure the relative efficiency: (i) direct personnel spending per capita, (ii) spending on goods and services per capita, and (iii) capital spending per capita. The two outputs applied were life expectancy and years of schooling. The results show that, of the 154 local governments, 16, across eight provinces in Sumatra, were relatively efficient. Furthermore, population density and per capita gross regional domestic product significantly and positively affected local governmentefficiency. However, the general purposes grant per capita did not affect local governmentefficiency. Regional expansion did not cause the new split-region governments to be more relatively efficient than the governments of their parent regions.

Suggested Citation

  • Rambe, Roosemarina Anggraini & Wibowo, Kodrat & Febriani, Ratu Eva & -, Septriani, 2020. "Assessing Local Government Efficiency: Evidence from Sumatra, Indonesia," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 27(2), pages 20-44, December.
    • Handle: RePEc:ris:apecjn:0044
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    Cited by:

    1. Charmaine B. Distor & Odkhuu Khaltar, 2022. "What Motivates Local Governments to Be Efficient? Evidence from Philippine Cities," Sustainability, MDPI, vol. 14(15), pages 1-19, August.

    More about this item

    Keywords

    local governmentspending; relative efficiency; regional split; general-purposegrants; DEA;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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