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Electoral accountability, fiscal decentralization and service delivery in Indonesia

Author

Listed:
  • 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.

Suggested Citation

  • Skoufias, Emmanuel & Narayan, Ambar & Dasgupta, Basab & Kaiser, Kai, 2011. "Electoral accountability, fiscal decentralization and service delivery in Indonesia," Policy Research Working Paper Series 5614, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5614
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    References listed on IDEAS

    as
    1. Blane Lewis, 2007. "On-Lending In Indonesia: Past Performance And Future Prospects," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 43(1), pages 35-58.
    2. Temple, Jonathan, 2001. "Growing into Trouble: Indonesia After 1966," CEPR Discussion Papers 2932, C.E.P.R. Discussion Papers.
    3. Daniel Lederman & Norman V. Loayza & Rodrigo R. Soares, 2005. "Accountability And Corruption: Political Institutions Matter," Economics and Politics, Wiley Blackwell, vol. 17, pages 1-35, March.
    4. Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, number 9780199548477.
    5. Junaid Ahmad & Shantayanan Devarajan & Stuti Khemani & Shekhar Shah, 2006. "Decentralization and Service Delivery," Chapters,in: Handbook of Fiscal Federalism, chapter 10 Edward Elgar Publishing.
    6. Clara Delavallade, 2006. "Corruption and distribution of public spending in developing countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(2), pages 222-239, June.
    7. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 867-893, March.
    8. Khemani, Stuti, 2004. "Political cycles in a developing economy: effect of elections in the Indian States," Journal of Development Economics, Elsevier, vol. 73(1), pages 125-154, February.
    9. Zhang, Xiaobo & Fan, Shenggen & Zhang, Linxiu & Huang, Jikun, 2001. "Local Governance And Public Goods Provision," 2001 Annual meeting, August 5-8, Chicago, IL 20570, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. 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, vol. 41(1), pages 57-79.
    11. Blane D. Lewis, 2005. "Indonesian Local Government Spending, Taxing and Saving: An Explanation of Pre- and Post-decentralization Fiscal Outcomes ," Asian Economic Journal, East Asian Economic Association, vol. 19(3), pages 291-317, September.
    12. Hofman, Bert & Kadjatmiko & Kaiser, Kai & Suharnoko Sjahrir, Bambang, 2006. "Evaluating fiscal equalization in Indonesia," Policy Research Working Paper Series 3911, 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, vol. 29(C), pages 62-79.
    2. Moricz, Sara & Sjöholm, Fredrik, 2014. "The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia," Working Papers 2014:15, Lund University, Department of Economics.
    3. Olsson, Ola & Valsecchi, Michele, 2015. "Resource Windfalls and Local Government Behaviour: Evidence From a Policy Reform in Indonesia," Working Papers in Economics 635, University of Gothenburg, Department of Economics.
    4. Ivo Bischoff & Ferry Prasetyia, 2015. "Determinants of local public expenditures on education: empirical evidence for Indonesian districts between 2005 and 2012," MAGKS Papers on Economics 201532, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. repec:eee:jcecon:v:45:y:2017:i:2:p:344-365 is not listed on IDEAS
    6. Kis-Katos, Krisztina & Sjahrir, Bambang Suharnoko, 2017. "The impact of fiscal and political decentralization on local public investment in Indonesia," Journal of Comparative Economics, Elsevier, vol. 45(2), pages 344-365.
    7. Tiwari, Smriti, 2017. "Does Local Development Influence Outmigration Decisions? Evidence from Indonesia," World Development, Elsevier, vol. 93(C), pages 108-124.
    8. Blane Lewis, 2016. "Local political fragmentation: Fiscal and service delivery effects in Indonesia," Departmental Working Papers 2016-16, The Australian National University, Arndt-Corden Department of Economics.
    9. Sacks, Audrey & Rahman, Erman & Turkewitz, Joel & Buehler, Michael & Saleh, Imad, 2014. "The dynamics of centralized procurement reform in a decentralized state : evidence and lessons from Indonesia," Policy Research Working Paper Series 6977, The World Bank.
    10. Monica Martinez-Bravo, 2014. "The Role of Local Officials in New Democracies: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 104(4), pages 1244-1287, April.
    11. repec:wsi:medjxx:v:05:y:2013:i:01:n:s1793812013500089 is not listed on IDEAS
    12. repec:eee:injoed:v:53:y:2017:i:c:p:12-27 is not listed on IDEAS

    More about this item

    Keywords

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

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