Does better local governance improve district growth performance in Indonesia?

Neil McCulloch () and Edmund Malesky ()
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Edmund Malesky: Graduate School of International Relations and Pacific Studies, \sUniversity of California

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: A large literature suggests that countries with better governance have higher growth rates. We explore whether this is also true at the sub-national level in Indonesia. We exploit a new dataset of firm perceptions of the quality of economic governance in 243 districts across Indonesia to estimate the impact of nine different dimensions of governance on district growth. Surprisingly, we find relatively little evidence of a robust relationship between the quality of governance and economic performance. However, we do find support for the idea that structural variables, such as economic size, natural resource endowments and population, have a direct influence on the quality of local governance as well as on economic growth. This suggests that efforts to improve local governance should pay greater attention to understanding how such structural characteristics shape the local political economy and how this in turn influences economic performance.

Keywords: governance; institutions; economic performance; economic growth (search for similar items in EconPapers)
JEL-codes: H70 O43 O56 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-cse and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:1711

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