Fiscal Decentralization and Governance Performance: Empirical Evidence from the District City Level in Indonesia BPK, IPB University
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Accepted
12 February 2024
Published
30 June 2024
Abstract
Decentralization policies are believed to be able to improve government governance, but research examining the relationship between decentralization and governance issues is still very limited. This study intends to examine the relationship between fiscal decentralization and governance performance as evaluated by SAKIP using panel data collected from 508 districts/cities in Indonesia between 2016 and 2021. Revenue indicators and expenditure indicators are used in the fiscal decentralization indicator. This study shows that fiscal decentralization, both in terms of revenue and expenditure, has a considerable favorable impact on governance performance using the Panel Ordered Probit Regression. The sub-sample study reveals that the impact of fiscal decentralization on governance performance varies depending on whether a jurisdiction is a district or a city, as well as whether it is located in the Java area or outside Java. Where district regional governments and regional governments outside of Java are more affected by fiscal decentralization.
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Rusydi, M. K., & Rossieta, H. (2015). Good Public Governance Dan Indeks Pembangunan Manusia. Proceeding SNA 18 Medan, 1–18.
Saputra, D. A., Ardila, L. N., Siddi, P., & Sutopo, B. (2018). Financial characteristics, human development index, and performance: a study of local governments in Indonesia. Jurnal Akuntansi & Auditing Indonesia, 22(2), 94–104. https://doi.org/10.20885/jaai.vol22.iss2.art2
Saputra, N. A. A., & Setiawan, D. (2021). Fiscal Decentralization, Accountability and Corruption Indication: Evidence from Indonesia. Jurnal Bina Praja, 13, 29–40. https://doi.org/10.21787/jbp.13.2021.29-40
Sedyaningsih, P., & Zaky, A. (2012). Pengaruh Karakteristik Pemerintah Daerah Dan Temuan Audit BPK Terhadap Kinerja Penyelenggaraan Pemerintahan Daerah (Studi pada Pemerintah Kabupaten di Sulawesi Selatan Tahun 2009 – 2012). 3(September), 1–47.
Sujarwoto. (2015). Desentralisasi, tata kelola pemerintahan, dan kemiskinan di negara-negara berkembang. Jurnal Ilmiah Administrasi Publik (JIAP), 1(1), 14–16.
Vel, J. A. C., & Bedner, A. W. (2015). Decentralisation and village governance in Indonesia: The return to the nagari and the 2014 Village law. Journal of Legal Pluralism and Unofficial Law, 47(3), 493–507. https://doi.org/10.1080/07329113.2015.1109379
Wardhani, R., Rossieta, H., & Martani, D. (2017). Good governance and the impact of government spending on performance of local government in Indonesia Ratna Wardhani *, Hilda Rossieta and Dwi Martani. Int. J. of Public Sector Performance Management, 3(1).
Armstrong, M., dan Baron A. (2000). Performance Management: The New Realities. London: Institute of Personnel and Development.
Bahl, R. (1999). Implementation Rules for Fiscal Decentralization (Issue January). https://mef.gob.pe/contenidos/pol_econ/documentos/Rules_Fiscal_Decentralization.pdf
Canare, T. (2021). Decentralization and development outcomes: What does the empirical literature really say? Review of Public Economics, 237(2), 111–151. https://dx.doi.org/10.7866/HPE-RPE.21.2.5
Drajat, E. U., & Manzilati, A. (2015). Pengaruh Kualitas Pemerintahan Terhadap Penanaman Modal Asing (Studi Empiris Pada Negara ASEAN Tahun 2009-2013). Jurnal Ilmiah Mahasiswa FEB. https://jimfeb.ub.ac.id/index.php/jimfeb/article/view/2370
Goel, R. K., Mazhar, U., Nelson, M. A., & Ram, R. (2017). Different forms of decentralization and their impact on government performance: Micro-level evidence from 113 countries. Economic Modelling, 62(January), 171–183. https://doi.org/10.1016/j.econmod.2016.12.010
Goel, R. K., & Nelson, M. A. (2011). Government fragmentation versus fiscal decentralization and corruption. Public Choice, 148(3–4), 471–490. https://doi.org/10.1007/s11127-010-9666-x
Handayani, F. A., & Nur, M. I. (2019). Implementasi Good Governance Di Indonesia. Publica: Jurnal Pemikiran Administrasi Negara, 11(1), 1–11. https://doi.org/10.15575/jpan.v11i1.7631
Juanda, B., Halim, A., Nasir, A., & Kaiwai, H. Z. (2013). Evaluasi Regulasi Pengelolaan Keuangan Daerah dan Pengaruhnya Terhadap Upaya Peningkatan Kualitas Belanja Daerah (R. A. Simanjuntak & H. Handra (eds.)). Kementerian Keuangan.
Kaufmann, D., & Kraay, A. (2002). Growth without Governance. Economía, 3(1), 169–229. https://doi.org/10.1353/eco.2002.0016
Kyriacou, A. P., Muinelo-Gallo, L., & Roca-Sagalés, O. (2017). Regional inequalities, fiscal decentralization and government quality. Regional Studies, 51(6), 945–957. https://doi.org/10.1080/00343404.2016.1150992
Kyriacou, A. P., & Roca-Sagalés, O. (2009). Fiscal decentralization and the quality of government: Evidence from panel data. Hacienda Publica Espanola, 189(2), 131–156.
Kyriacou, A. P., & Roca-Sagalés, O. (2011). Fiscal decentralization and government quality in the OECD. Economics Letters, 111(3), 191–193. https://doi.org/10.1016/j.econlet.2011.02.019
Linawati, Y., Suzantia, H., & Wibowo, M. G. (2021). Dampak Tata Kelola Pemerintahan Terhadap Pertumbuhan Ekonomi dan Indeks Pembangunan Manusia: Studi Kasus Negara Berkembang OKI. TEMALI : Jurnal Pembangunan Sosial, 4(2), 133–144. https://doi.org/10.15575/jt.v4i2.12547
Martinez-Vazquez, J., Lago-Peñas, S., & Sacchi, A. (2017). the Impact of Fiscal Decentralization: a Survey. Journal of Economic Surveys, 31(4), 1095–1129. https://doi.org/10.1111/joes.12182
Mudalige, P. W. (2019). The Discussion of Theory and Practice on Decentralization and Service Delivery. European Scientific Journal ESJ, 15(14), 115–135. https://doi.org/10.19044/esj.2019.v15n14p115
Negara, B. P., & Khoirunurrofik, K. (2021). Dampak Desentralisasi Fiskal terhadap Konvergensi Pendapatan Perkapita antar Kabupaten/Kota di Indonesia. Indonesian Treasury Review: Jurnal Perbendaharaan, Keuangan Negara Dan Kebijakan Publik, 6(1), 1–18. https://doi.org/10.33105/itrev.v6i1.185
Nurcahyo, A. D., & Mahi, B. R. (2022). Analisa Dana Transfer Pusat dan Probabilitas Terjadinya Korupsi di Tingkat Pemerintah Daerah. Integritas : Jurnal Antikorupsi, 8(1), 95–102. https://doi.org/10.32697/integritas.v8i1.862
Purbadharmaja, I. B. P., Maryunani, I. B. P., Ananda, C. F., & Santoso, D. B. (2019). The implications of fiscal decentralization and budget governance on economic capacity and community welfare. Foresight, 21(2), 227–249. https://doi.org/10.1108/FS-05-2018-0052
Rustiyaningsih, S., & Immanuela, I. (2014). Faktor Faktor yang Mempengaruhi Kinerja Pemerintah Daerah. Widya Warta, 2(38), 190–203.
Rusydi, M. K., & Rossieta, H. (2015). Good Public Governance Dan Indeks Pembangunan Manusia. Proceeding SNA 18 Medan, 1–18.
Saputra, D. A., Ardila, L. N., Siddi, P., & Sutopo, B. (2018). Financial characteristics, human development index, and performance: a study of local governments in Indonesia. Jurnal Akuntansi & Auditing Indonesia, 22(2), 94–104. https://doi.org/10.20885/jaai.vol22.iss2.art2
Saputra, N. A. A., & Setiawan, D. (2021). Fiscal Decentralization, Accountability and Corruption Indication: Evidence from Indonesia. Jurnal Bina Praja, 13, 29–40. https://doi.org/10.21787/jbp.13.2021.29-40
Sedyaningsih, P., & Zaky, A. (2012). Pengaruh Karakteristik Pemerintah Daerah Dan Temuan Audit BPK Terhadap Kinerja Penyelenggaraan Pemerintahan Daerah (Studi pada Pemerintah Kabupaten di Sulawesi Selatan Tahun 2009 – 2012). 3(September), 1–47.
Sujarwoto. (2015). Desentralisasi, tata kelola pemerintahan, dan kemiskinan di negara-negara berkembang. Jurnal Ilmiah Administrasi Publik (JIAP), 1(1), 14–16.
Vel, J. A. C., & Bedner, A. W. (2015). Decentralisation and village governance in Indonesia: The return to the nagari and the 2014 Village law. Journal of Legal Pluralism and Unofficial Law, 47(3), 493–507. https://doi.org/10.1080/07329113.2015.1109379
Wardhani, R., Rossieta, H., & Martani, D. (2017). Good governance and the impact of government spending on performance of local government in Indonesia Ratna Wardhani *, Hilda Rossieta and Dwi Martani. Int. J. of Public Sector Performance Management, 3(1).
Authors
AstrianaS., & KhoirunurrofikK. (2024). Fiscal Decentralization and Governance Performance: Empirical Evidence from the District City Level in Indonesia: BPK, IPB University. JURNAL EKONOMI DAN KEBIJAKAN PEMBANGUNAN, 13(1), 15-29. https://doi.org/10.29244/jekp.13.1.2024.15-29
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