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How corruption diminishes the effectiveness of public spending on education in Indonesia

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  • Daniel Suryadarma

Abstract

This paper takes advantage of a regional corruption measure to assess the impact of corruption on the effectiveness of public spending in the education sector in Indonesia, one of the most corrupt countries in the world. Two sets of outcomes are considered: school enrolment rates and school performance in national examinations. Public spending appears to have a negligible effect on school enrolment in highly corrupt regions, but a statistically significant, positive and relatively large effect in less corrupt regions. In contrast, public spending has no significant effect on school performance. The main lesson from this paper is that pouring more public funds into the education system is unlikely to bring about improvement unless it is accompanied by efforts to improve governance in the sector.

Suggested Citation

  • Daniel Suryadarma, 2012. "How corruption diminishes the effectiveness of public spending on education in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 48(1), pages 85-100, April.
    • Handle: RePEc:taf:bindes:v:48:y:2012:i:1:p:85-100
    DOI: 10.1080/00074918.2012.654485
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    References listed on IDEAS

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    1. Lanjouw, Peter & Pradhan, Menno & Saadah, Fadia & Sayed, Haneen & Sparrow, Robert, 2001. "Poverty, education, and health in Indonesia : who benefits from public spending?," Policy Research Working Paper Series 2739, The World Bank.
    2. Wenefrida Dwi Widyanti & Asep Suryahadi, "undated". "The State of Local Governance and Public Services in the Decentralized Indonesia in 2006: Findings from the Governance and Decentralization Survey 2 (GDS2)," Working Papers 634, Communications Section.
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