Political competition and economic performance: evidence from Indonesia

Jahen Rezki

Economics of Governance, 2022, vol. 23, issue 2, No 1, 83-114

Abstract: Abstract This paper analyses the impact of political competition on economic performance in Indonesia. This study uses a database covering 427 districts in Indonesia, from 2000 to 2013. Political competition is measured using the Herfindahl Hirschman Concentration Index for the district parliament election. This variable is potentially endogenous, because political competition is likely to be non-random and correlated with unobservable variables. To solve this problem, I use the lag of the average political competition within the same province as the instrumental variable for political competition. The degree of political competition boosts real Regional Gross Domestic Product (RGDP) per capita and RGDP growth by 0.7 and 0.6%, respectively. This study also finds that stiffer political competition is associated with lower own source revenue, higher non agricultural RGDP share, and higher Human Development Index (HDI).

Keywords: Political competition; Regional government; Indonesia; Economic performance (search for similar items in EconPapers)
JEL-codes: D78 H71 H72 O1 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: Political Competition and Economic Performance: Evidence from Indonesia (2020)
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DOI: 10.1007/s10101-022-00272-3

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