Assessing Local Government Efficiency: Evidence from Sumatra, Indonesia

Roosemarina Anggraini Rambe (), Kodrat Wibowo, Ratu Eva Febriani and Septriani -
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Roosemarina Anggraini Rambe: Department of Economic Development, University of Bengkulu, Indonesia
Kodrat Wibowo: Indonesia Competition Commission
Ratu Eva Febriani: Department of Economic Development, University of Bengkulu, Indonesia
Septriani -: Department of Economic Development, University of Bengkulu, Indonesia

Asian Journal of Applied Economics/ Applied Economics Journal, 2020, vol. 27, issue 2, 20-44

Abstract: The purposes of this research were to assess the relative efficiency of local governmentspending in Sumatra, Indonesia and to analyze the determinants of this efficiency. Data Envelopment Analysis (DEA) and multiple regression were employed for a data setof the spending of 154 local governmentsin 2016. Three inputs were used to measure the relative efficiency: (i) direct personnel spending per capita, (ii) spending on goods and services per capita, and (iii) capital spending per capita. The two outputs applied were life expectancy and years of schooling. The results show that, of the 154 local governments, 16, across eight provinces in Sumatra, were relatively efficient. Furthermore, population density and per capita gross regional domestic product significantly and positively affected local governmentefficiency. However, the general purposes grant per capita did not affect local governmentefficiency. Regional expansion did not cause the new split-region governments to be more relatively efficient than the governments of their parent regions.

Keywords: local governmentspending; relative efficiency; regional split; general-purposegrants; DEA (search for similar items in EconPapers)
JEL-codes: D61 H76 H77 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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