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Political Accountability, Fiscal Conditions, and Local Government Performance – Cross-Sectional Evidence from Indonesia

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  • Sebastian Eckardt

Abstract

What 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.

Suggested Citation

  • Sebastian Eckardt, 2007. "Political Accountability, Fiscal Conditions, and Local Government Performance – Cross-Sectional Evidence from Indonesia," Working Papers 02-2007, Institute of Local Public Finance.
  • Handle: RePEc:lpf:wpaper:02-2007
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    References listed on IDEAS

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    Cited by:

    1. Smoke, Paul, 2016. "Looking Beyond Conventional Intergovernmental Fiscal Frameworks: Principles, Realities, and Neglected Issues," ADBI Working Papers 606, Asian Development Bank Institute.
    2. Vásquez, William F., 2011. "Household preferences and governance of water services: A hedonic analysis from rural Guatemala," IFPRI discussion papers 1152, International Food Policy Research Institute (IFPRI).
    3. Luca Gnan & Alessandro Hinna & Fabio Monteduro & Danila Scarozza, 2013. "Corporate governance and management practices: stakeholder involvement, quality and sustainability tools adoption," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(4), pages 907-937, November.

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    More about this item

    Keywords

    governance; public services; fiscal decentralization;
    All these keywords.

    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, Innovation, Technological Change, and Growth - - Economic Development

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