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

34 Pages Posted: 18 Jan 2014

See all articles by Krisztina Kis-Katos

Krisztina Kis-Katos

University of Freiburg - College of Economics and Behavioral Sciences

Bambang Suharnoko Sjahrir

World Bank

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

JEL Classification: H72, H75

Suggested Citation

Kis-Katos, Krisztina and Suharnoko Sjahrir, Bambang, The Impact of Fiscal and Political Decentralization on Local Public Investments in Indonesia. IZA Discussion Paper No. 7884. Available at SSRN: https://ssrn.com/abstract=2381136

Krisztina Kis-Katos (Contact Author)

University of Freiburg - College of Economics and Behavioral Sciences ( email )

Freiburg, D-79085
Germany
+44 - (0)761 203 2344 (Phone)
+44 - (0)761 203 2414 (Fax)

HOME PAGE: http://www.vwl.uni-freiburg.de/fakultaet/sopo/team/kis-katos.htm

Bambang Suharnoko Sjahrir

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
190
Abstract Views
651
rank
170,950
PlumX Metrics