Fiscal Decentralization and Economic Growth: Evidence from Indonesia

Fauziah Swasono
Additional contact information
Fauziah Swasono: Institute for Economic and Social Research (LPEM)

Economics and Finance in Indonesia, 2007, vol. 55, 109-134

Abstract: As more countries embrace decentralization, economists have been debating its impact on economic growth. They use both single and cross country empirical data and find mixed evidences. Indonesia is one recent example of country’s migration transition from a centralized regime to a decentralized one. It is unique for its scope, scale and time of preparation. The country had only less than two years of preparation to abandon three decades of a centralized system. Decentralization meant that the central government devolved almost all public service functions all at once to 367 sub-provincial (district) governments. This paper presents the evidence of decentralization’s impact on growth in Indonesia. We use two decentralization measures: own source revenue ratio and expenditure ratio, and examine their impact on growth by using panel data covering the 1991 to 2005 period. We find that in Indonesia, hitherto, fiscal decentralization has a negative impact on growth

Keywords: Fiscal Decentralization; Growth (search for similar items in EconPapers)
JEL-codes: H R (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://lpem.org/repec/lpe/efijnl/200707.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:200707

Access Statistics for this article

More articles in Economics and Finance in Indonesia from Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Halley Yudhistira ( this e-mail address is bad, please contact ).