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Administrative overspending in Indonesian districts: The role of local politics

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  • Bambang Suharnoko Sjahrir
  • Krisztina Kis-Katos
  • Guenther G. Schulze

    (Department of International Economic Policy, University of Freiburg)

Abstract

We analyze the determinants of the excessive administrative spending of local governments in Indonesia. In an unbalanced panel data set of 399 districts for 2001?2009, we show that the proliferation of districts has not led to increased administrative spending; instead a lack of political accountability is responsible for this excess. The degree of political competition influences the level of administrative spending significantly; newly introduced direct elections of district heads, however, did not curtail the waste.

Suggested Citation

  • Bambang Suharnoko Sjahrir & Krisztina Kis-Katos & Guenther G. Schulze, 2013. "Administrative overspending in Indonesian districts: The role of local politics," Discussion Paper Series 24, Department of International Economic Policy, University of Freiburg, revised Jul 2013.
    • Handle: RePEc:fre:wpaper:24
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    Cited by:

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    2. 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).
    3. Lambsdorff Johann Graf & Schulze Günther G., 2015. "Guest Editorial: Special Issue on Corruption at the Grassroots-level: What Can We Know About Corruption?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(2), pages 100-114, April.
    4. Nathaniel Mason & Charles Oyaya & Julia Boulenouar, 2020. "Reforming urban sanitation under decentralization: Cross‐country learning for Kenya and beyond," Development Policy Review, Overseas Development Institute, vol. 38(1), pages 42-63, January.
    5. Cisneros, Elías & Kis-Katos, Krisztina & Nuryartono, Nunung, 2021. "Palm oil and the politics of deforestation in Indonesia," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    6. Farah, Alfa, 2019. "Fiscal decentralization and electoral participation: Analyzing districts in Indonesia," CIW Discussion Papers 4/2019, University of Münster, Center for Interdisciplinary Economics (CIW).
    7. Estache, Antonio & Garsous, Grégoire & Seroa da Motta, Ronaldo, 2016. "Shared Mandates, Moral Hazard, and Political (Mis)alignment in a Decentralized Economy," World Development, Elsevier, vol. 83(C), pages 98-110.
    8. Ricks, Jacob I., 2016. "Building Participatory Organizations for Common Pool Resource Management: Water User Group Promotion in Indonesia," World Development, Elsevier, vol. 77(C), pages 34-47.
    9. Jahen F. Rezki, 2022. "Political competition and economic performance: evidence from Indonesia," Economics of Governance, Springer, vol. 23(2), pages 83-114, June.
    10. Blane D. Lewis & Adrianus Hendrawan, 2018. "The impact of mayor-council coalitions on local government spending, service delivery, and corruption in Indonesia," Departmental Working Papers 2018-19, The Australian National University, Arndt-Corden Department of Economics.
    11. Gonschorek, Gerrit J., 2021. "Subnational favoritism in development grant allocations: Empirical evidence from decentralized Indonesia," World Development, Elsevier, vol. 139(C).
    12. Lewis, Blane D. & Hendrawan, Adrianus, 2019. "The impact of majority coalitions on local government spending, service delivery, and corruption in Indonesia," European Journal of Political Economy, Elsevier, vol. 58(C), pages 178-191.
    13. Blane D. Lewis, 2017. "Local government spending and service delivery in Indonesia: the perverse effects of substantial fiscal resources," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1695-1707, November.
    14. Ryan Edwards, 2015. "Is plantation agriculture good for the poor? Evidence from Indonesia's palm oil expansion," Departmental Working Papers 2015-12, The Australian National University, Arndt-Corden Department of Economics.
    15. 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.
    16. Barde, Julia Alexa, 2017. "What Determines Access to Piped Water in Rural Areas? Evidence from Small-Scale Supply Systems in Rural Brazil," World Development, Elsevier, vol. 95(C), pages 88-110.
    17. Azis Iwan J. & Pratama Alvin, 2020. "Polarization and Local Conflicts in Post Decentralization Indonesia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 26(2), pages 1-28, May.
    18. Gerrit J. Gonschorek, 2020. "Subnational Favoritism in Development Grant Allocations – Empirical Evidence from Decentralized Indonesia," Discussion Paper Series 38, Department of International Economic Policy, University of Freiburg, revised Feb 2020.
    19. Hal Hill, 2018. "Asia's Third Giant: A Survey of the Indonesian Economy," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 469-499, December.
    20. Rezki, Jahen Fachrul, 2018. "Political Competition and Local Government Performance: Evidence from Indonesia," SocArXiv nekps, Center for Open Science.
    21. Julia Alexa Barde, 2014. "What Determines Access to Piped Water in Rural Areas?Evidence from Small-scale Supply Systems in Rural Brazil," Discussion Paper Series 30, Department of International Economic Policy, University of Freiburg, revised Dec 2014.

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    More about this item

    Keywords

    administrative expenditures; decentralization; direct elections; Indonesia;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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