The impact of mayor-council coalitions on local government spending, service delivery, and corruption in Indonesia

Blane Lewis and Adrianus Hendrawan

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This study examines the impact of majority coalitions on local government spending, service delivery, and corruption in Indonesia. The investigation finds that majority coalitions, i.e. those coalitions for which participating political parties control greater than half of council seats, cause a shift in local government spending towards health sector activities and induce improvements in citizen health service access—but only for a year or two, after which the positive effects disappear. The study shows that budget fraud starts to become problematic in the last two years of the coalition’s life. Majority coalition support for the local health spending and service agenda dissipates quickly as attention turns to corrupting the budget, via increased infrastructure outlays and associated rent-seeking. We hypothesize that budget fraud serves, in part, to finance subsequent rounds of local parliamentary and executive elections.

Keywords: majority coalitions; local government spending and service delivery; corruption; regression discontinuity; Indonesia (search for similar items in EconPapers)
JEL-codes: H72 H75 H76 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2018
New Economics Papers: this item is included in nep-cdm, nep-dev, nep-pol and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2018-19

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