Fiscal Decentralisation, Local Institutions and Public Good Provision: Evidence from Indonesia

Pal, Sarmistha and Wahhaj, Zaki (2016) Fiscal Decentralisation, Local Institutions and Public Good Provision: Evidence from Indonesia. Journal of Comparative Economics, 45 (2). pp. 383-409. ISSN 0147-5967. (doi:https://doi.org/10.1016/j.jce.2016.07.004) (Full text available)

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http://dx.doi.org/10.1016/j.jce.2016.07.004

Abstract

Using data from the Indonesian Family Life Surveys, we study the impact of fiscal decentralisation in Indonesia on local public spending across communities characterised by different types of informal and formal institutions. Our results provide new evidence that fiscal decentralisation led to a significant increase in community spending on social infrastructure (health and education) in communities which observed strict adherence to customary laws and had a tradition of local democracy. We argue that investment in transport and communication facilitates exchange with outsiders and improves the outside options of community members, thus making it more difficult to sustain intra-community cooperation. Consequently, communities which enjoy a high level of cooperation in collective activities benefit less from investing in transport and communication and are more inclined to invest in social infrastructure.

Item Type: Article
Uncontrolled keywords: Decentralisation; Democratisation; Collective activities; Mutual Co-operation; Traditional laws; Social and physical infrastructure; Local public spending; Indonesia
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HJ Public Finance
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Zaki Wahhaj
Date Deposited: 18 Aug 2016 16:42 UTC
Last Modified: 28 Jul 2018 23:00 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/56876 (The current URI for this page, for reference purposes)
Wahhaj, Zaki: https://orcid.org/0000-0001-8285-7670
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