THE EFFICIENCY OF VILLAGE GOVERNMENT SPENDING IN INDONESIA: A META-FRONTIER ANALYSIS

https://doi.org/10.22146/jieb.44660

Tengku Munawar Chalil(1*)

(1) Doctoral Student Department of Comparative Public Policy Osaka School of International Public Policy Osaka University Japan
(*) Corresponding Author

Abstract


Introduction: This study aims to measure the efficiency of village government spending and examine the effects of village transfers (Dana Desa) and institutional properties on its efficiency. Background Problems: The village law has endowed extra grants to village governments, which questions if the villages are prepared to adequately handle large increases in funding. Novelty: While previous studies address the misappropriation in spending within the municipal dimension, this study explores the spending efficiency of the autonomous sub-municipal governments and explains the impacts of both lump-sum grants and bureaucracy factors on spending efficiency. Research Methods: This study analyzes the Indonesian 2014 Village Governments’ dataset, using the meta-cost frontier in order to measure village spending efficiency, then it probes the causal impacts of endowed fiscal transfers and bureaucratic factors on the obtained efficiency. Findings/Results: The results suggest that granting direct transfers would exacerbate the spending inefficiencies of autonomous villages. Administrative factors such as a large bureaucracy and a lack of bureaucratic capacity within the body of village governments positively affect spending inefficiencies. Conclusion: The result of this research reflects that there is a need to evaluate the village governance policy to increase spending efficiencies, specifically focusing on the adequacy of village institutions to handle village transfers.

Keywords


decentralization, efficiency, bureaucracy, Indonesia

Full Text:

PDF


References

Akai, N., Sato, M., & Yamashita, K. (2001, February). Intergovernmental transfers in Japan and soft budgets. In International Symposium on Intergovernmental Transfers in Asian Countries: Issues and Practices, Asian Tax and Public Policy Program, Tokyo (Hitotsubashi University).

Antlöv, H. (2003). Village government and rural development in Indonesia: The new democratic framework. Bulletin of Indonesian Economic Studies, 39(2), 193-214. DOI: 10.1080/00074910302013

Antlöv, H., Wetterberg, A., & Dharmawan, L. (2016). Village governance, community life, and the 2014 village law in Indonesia. Bulletin of Indonesian Economic Studies, 52(2), 161-183. DOI: 10.1080/00074918.2015.1129047

Aspinall, E. (Ed.). (2003). Local Power & Politics in Indonesia. Flipside Digital Content Company Inc.

Aspinall, E., & Rohman, N. (2017). Village head elections in Java: Money politics and brokerage in the remaking of Indonesia's rural elite. Journal of Southeast Asian Studies, 48(1), 31-52. DOI: 10.1017/S0022463416000461

Battese, G. E., & Rao, D. P. (2002). Technology gap, efficiency, and a stochastic meta-frontier function. International Journal of Business and Economics, 1(2), 87.

Battese, G. E., Rao, D. P., & O'donnell, C. J. (2004). A meta-frontier production function for estimation of technical efficiencies and technology gaps for firms operating under different technologies. Journal of Productivity Analysis, 21(1), 91-103. DOI: 10.1023/B:PROD.0000012454.06094.29

Battese, G. E., & Coelli, T. J. (1992). Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India. Journal of Productivity Analysis, 3(1-2), 153-169. DOI: 10.1007/BF00158774

Boetti, L., Piacenza, M., & Turati, G. (2012). Decentralization and local governments' performance: How does fiscal autonomy affect spending efficiency? FinanzArchiv/Public Finance Analysis, 68(3), 269-302. DOI: 10.1628/001522112X653840

Borge, L. E., Falch, T., and Tovmo, P. (2008). Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation. Public Choice, 136(3-4), 475-495. DOI: 10.1007/s11127-008-9309-7

De Borger, B., & Kerstens, K. (1996). Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches. Regional Science and Urban Economics, 26(2), 145-170. DOI: 10.1016/0166-0462(95)02127-2

Hlepas, N., Kersting, N., Kuhlmann, S., Swianiewicz, P., &Teles, F. (2018). Introduction: Decentralization beyond the municipal tier. In Sub-Municipal Governance in Europe (pp. 1-24). Palgrave Macmillan, Cham.

Hjalmarsson, L., Kumbhakar, S. C., & Heshmati, A. (1996). DEA, DFA and SFA: A comparison. Journal of Productivity Analysis, 7(2-3), 303-327. DOI: 10.1007/BF00157046

Kau, J. B., & Rubin, P. H. (1981). The size of government. Public Choice, 37(2), 261-274. DOI: 10.1007/BF00138246

Kumbhakar, S. C., & Lovell, C. K. (2000). Stochastic frontier analysis. Cambridge University Press.

Lewis, B. D. (2015). Decentralizing to villages in Indonesia: Money (and other) mistakes. Public Administration and Development, 35(5), 347-359. DOI: 10.1002/pad.1741

Mansuri, G., & Rao, V. (2012). Localizing development: Does participation work? The World Bank.

Martinez-Bravo, M. (2014). The role of local officials in new democracies: Evidence from Indonesia. American Economic Review, 104(4), 1244-87. DOI: 10.1257/aer.104.4.1244

Maharjan, K. L. (2014). Capacity of rural institutions in implementing decentralized development in Indonesia: Case of three villages in Purbalingga District, Central Java Province. In Communities and Livelihood Strategies in Developing Countries (pp. 143-167). Springer, Tokyo.

Moesen, W., & Van Cauwenberge, P. (2000). The status of the budget constraint, federalism and the relative size of government: A bureaucracy approach. Public Choice, 104(3-4), 207-224. DOI: 10.1023/A:1005116413195

Niskanen, W. A. (1968). The peculiar economics of bureaucracy. The American Economic Review, 58(2), 293-305. Retrieved from http://www.jstor.org/stable/1831817

Roudo, M., & Chalil, T. M. (2016). Depolarization in delivering public services? Impacts of minimum service standards (MSS) on the quality of health services in Indonesia. Journal of Regional and City Planning, 27(1), 1-15.

Smoke, P., & Lewis, B. D. (1996). Fiscal decentralization in Indonesia: A new approach to an old idea. World Development, 24(8), 1281-1299. DOI: 10.1016/0305-750X(96)00042-3

Treisman, D. (2000). The causes of corruption: A cross-national study. Journal of Public Economics, 76(3), 399-457. DOI: 10.1016/S0047-2727(99)00092-4



DOI: https://doi.org/10.22146/jieb.44660

Article Metrics

Abstract views : 4692 | views : 3512

Refbacks

  • There are currently no refbacks.




Copyright (c) 2020 Journal of Indonesian Economy and Business

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Indonesian Economy and Business

Journal

Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism

Authors

Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees

Download

Author Pack
Submission Form & Manuscript Template

 

Reviewer

Reviewer Guidelines
Reviewer Acknowledgement

 

Reader

General Search
Achieves
Author index
Title index

 

 

The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics