Institutional Model of Decentralization in Action

36 Pages Posted: 26 Feb 2012

Date Written: December 2011


Applying the Institutional Model of Decentralization, the paper argues that the presumption that local democracy will impose accountability pressure on elected officials does not always hold. Even in a democratic system like in Indonesia, decentralization policy is welfare-enhancing only for the developed regions, not for all, exacerbating interregional welfare disparity. This “captured democracy” is largely due to the presence of “negative local capture”. Where welfare has not improved, limited participation, low initial welfare combined with poor quality of local leaders are found to be the most critical determinants.

Keywords: decentralization, local democracy, people participation, accountability, governance, government accountability

JEL Classification: D72, D73, H41, H42, H77, I38, O17

Suggested Citation

Azis, Iwan J., Institutional Model of Decentralization in Action (December 2011). Asian Development Bank Economics Working Paper Series No. 288, Available at SSRN: or

Iwan J. Azis (Contact Author)

Cornell University ( email )

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Ithaca, NY 14853
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