Fiscal Decentralization and Government Expenditure Efficiency in Indonesia: A Malmquist Productivity Index

Anisah Alfada
Additional contact information
Anisah Alfada: Waseda University, Japan

Expert Journal of Economics, 2019, vol. 7, issue 1, 45-57

Abstract: This research examines regional government performance in Indonesia’s provinces after the implementation of fiscal decentralization in 2001 using a two-stage approach. First, extensive input and output data are utilized to measure government productivity and efficiency indices using a Malmquist productivity index (MPI) for four significant expenditures for the 2004-2015 period: infrastructure, education, health and social protection. Second, the relationship between the degree of fiscal decentralization and the first-stage productivity scores is analyzed using a Tobit model. This study provides extensive and internationally comparable data that distinguish it from existing studies in Indonesia because appropriate input and output data are the significant elements in measuring government expenditure efficiency. From the estimation results, the degree of fiscal decentralization is found to promote government expenditure efficiency. Tax revenue collected by regional governments will support government expenditure efficiency in the infrastructure, education and health sectors; however, the degree of fiscal decentralization seems to negatively affect the government expenditure efficiency in the social protection sector. Therefore, the methodology constructed in this research can be a prominent instrument for the government to upgrade regional government performance in Indonesia.

JEL-codes: C14 C24 H11 H50 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://economics.expertjournals.com/ark:/16759/EJE_703alfada45-57.pdf (application/pdf)
http://economics.expertjournals.com/23597704-703 (text/html)

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:exp:econcs:v:7:y:2019:i:1:p:45-57

Access Statistics for this article

More articles in Expert Journal of Economics from Sprint Investify
Bibliographic data for series maintained by Alin Opreana ( this e-mail address is bad, please contact ).