The Impact of Fiscal and Political Decentralization on Local Public Investments in Indonesia

Krisztina Kis-Katos and Bambang Suharnoko Sjahrir ()
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Bambang Suharnoko Sjahrir: University of Freiburg

No 7884, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate the effects of the Indonesian decentralization and democratization process on budget allocation at the sub-national level. Based on panel data for 271 Indonesian districts for the years of 1994 to 2009, we address the determinants of local investment expenditures in public infrastructure in the sectors of education, health, and physical infrastructure. We find that after the dramatic expenditure decentralization of 2001, districts with relatively lower levels of public infrastructure started to invest more in these sectors. In contrast to the marked budgeting changes following fiscal and administrative decentralization, we find no consistent effects of the democratization process on local public investments. Our results reflect initial improvements in local targeting but show no evidence of increasing electoral accountability.

Keywords: decentralization; democratic elections; budget allocation; Indonesia (search for similar items in EconPapers)
JEL-codes: H72 H75 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-01
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Citations: View citations in EconPapers (6)

Published - published in: Journal of Comparative Economics, 2017, 45 (2), 344-365

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Related works:
Journal Article: The impact of fiscal and political decentralization on local public investment in Indonesia (2017)
Working Paper: The Impact of Fiscal and Political Decentralization on Local Public Investments in Indonesia (2014)
Working Paper: The impact of fiscal and political decentralization on local public investments in Indonesia (2014)
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