Download - Village Governance Rumayya
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Decentralization &
Quality of Local Governance in Indonesia
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Research Question
How does the impact of decentralization on
local governance quality in Indonesia,
especially at village level?
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Indonesia Big Bang Decentralization Reform
History
Economic, social and political crisis 1997/98
Severe inter-regional inequalities A threatened national unity
East Timor independence in 1999
June 1999: first free and fair elections (legislative)
August 1999: Law 22/1999 and Law 25/1999 passed
Fully implemented in 2001
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Dimension
Fiscal (more on spending than expenditure)
Administrative (function) Political (local election)
Local council & district head
First direct election in 2005
Indonesia Big Bang Decentralization Reform
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Imbalanced Fiscal Decentralization
Source: Eckardt & Shah (2006) based on data of 294 Indonesias local governments in 2005
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Source: Akita and Subkhan (2004)
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Source: Akita and Subkhan (2004)
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What have been done
Growth (Pepinsky & Wihardja 2011) --> Neutral
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What have been done (cont.)
Inter-jurisdictional competition (del Granado et al. 2008
Yardstick competition and expenditure spillover effect
Not tax competition
Public goods and service provision (Chowdury et al. 2009;2010; Simatupang 2009; Skoufias et al. 2011; Sjahrir & Kis-Kastos 2011) health, education and infrastructure
Improvement in outcome and deliveries/availability Responsiveness and preference matching increased
No evidence in local capture
Fiscal decentralization matters more than politicaldecentralization
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What have been done (cont.)
Corruption (Henderson & Kuncoro, 2004; 2011)Politics matters
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However
Most study is using district level data
Governance and political economy aspects is
under-researched
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Why governance?
The puzzle behind public spending & outcome
Cross country (Rajkumar & Swaroop 2008)
Indonesia (Sumarto et al2004; Suryadarma 2012)
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Why governance?
The puzzle behind public spending & outcome
Cross country (Rajkumar & Swaroop 2008)
Indonesia (Sumarto et al2004; Suryadarma 2012)
Definitionthe institution by which authority is exercised and public
resource are managed... (de Mello & Barenstein 2001)
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Why governance? (cont.)
Measurement
World Bank
voice & accountability, political stability,
government effectiveness, regulatory quality, rule
of law, control of corruption.
Political Risk Services Group
corruption, bureaucratic quality, rule of law, risk ofexpropriation of property.
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Why village?
Policy planning and implementation
Ex: Poverty program
Targeting
Disbursement
Unique nature of village governance in
Indonesia
Urban village (Kelurahan) Appointed Leader
Rural village (Desa) Elected leader
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Related works
Elected vs. Appointed Leader
Mu & Zhang (2011) public resource distribution
Election and accountability
Martinez-Bravo et al (2011) policy change in
favour of voter preferencere-election incentive
Leaders characteristics
More educated leaders generate higher growth
(Besley 2011)
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Data
Indonesia Family Life Survey (IFLS).
A longitudinal socioeconomic and health survey.
4 waves:
IFLS1 (1993), IFLS2(1997), IFLS3(2000), IFLS4(2007). Representing 83% of the population in 1997.
13 provinces from 27 provinces in 1997.
312 communities in rural and urban.
IFLS1 7,224 households and 22,000 individuals. Re-contact rate above 90% in each wave.
Individual household community.
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Descriptive Statistics
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Village leader selection methods 1997/2007
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Village Fiscal Autonomy
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Corruption change 2000/07
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Empirical Model
GQ = f ( LSM, FA, PE, POV, X)
GQ = change in governance quality; LSM = change in leader selection method;
FA = change in fiscal autonomy;
PE= a group of political economy variables (voterbehaviour/characteristics and leader education);
POV= initial poverty rate;
X= a group control variables.