FISCAL DECENTRALIZATION POLICY IN IMPROVING THE REGIONAL ECONOMY: A SPATIAL ECONOMETRIC APPROACH

https://doi.org/10.22146/jkap.54803

Nurjannah - Yusuf(1*)

(1) IPB University STIA Menarasiswa
(*) Corresponding Author

Abstract


Indonesia faced the problem of economic inequality and a low level of per capita income, especially in areas producing mining goods and quarries, which are a source of national income. Exports for these commodities do not affect increasing regional income per capita. This problem became a reason; decentralization is a political policy choice after the fall of the New Order in 1998, as a reform resulting in each region would have space to actualize its regional potential, both economically and politically. Nevertheless, after 20 years of implementation, decentralization, inequality, and poverty in the eastern region have not experienced much change. Also, the decentralized system, especially fiscal decentralization, actually burden of the central government financial, because the provinces are most dependent on central government funds. This study investigates why decentralization does not affect reducing poverty and how it should work. It was using a spatial approach to assess the regional economy for the period 2004-2015 with applied the spatial Durbin model (SDM) panel of data from 33 provinces in Indonesia. The results found that the level of provincial per capita income did not determine by initial income or the amount of transfer fund, but it is by imports and exports. While local revenue government is a source of transfer grant does not impact except much less for growth economic of regional.

Keywords


decentralization; growth economic; spatial Durbin model

Full Text:

PDF


References

Agyemang-Duah, W., Kafui Gbedoho, E., Peprah, P., Arthur, F., Kweku Sobeng, A., Okyere, J., & Mengba Dokbila, J. (2018). Reducing poverty through fiscal decentralization in Ghana and beyond: A review. Cogent Economics and Finance, 6(1), 1–14. https://doi.org/10.1080/23322039.2018.1476035 Ali Khan, S. (2013). Decentralization and poverty reduction: A theoretical framework for exploring the linkages. International Review of Public Administration. https://doi.org/10.1080/12294659.2013.10805256 Arif, A., & Maksum, I. R. (2017). Functional decentralization Construct in Decentralization Policy in Indonesia. (A study of Irrigation, Education, and Free trade sectors). JKAP (Jurnal Kebijakan Dan Administrasi Publik), 21(1), 59. https://doi.org/10.22146/jkap.25383 Asante Felix and AyeeJoseph. (2010). Decentralization and poverty reduction. ResearchGate, (January), 471–505. https://doi.org/10.4337/9780857932297 Bennett Robert J and Hordijk Leen. (1986). Regional econometric and dynamic models. In K. J. A. and M. D. Intriligatop (Ed.), Handbooks of regional and Urban Economics (7th ed., pp. 407–435). New York N.Y 10017: Elsevier B.V. Blume, L. E., & Sargent, T. J. (2015). Harrod 1939. Economic Journal, 125(583), 350–377. https://doi.org/10.1111/ecoj.12224 Breusch, T., & Pagan, A. (1979). No Title A Simple Test for Heteroscedasticity and Random Coefficient Variation. Econometrica, JSTOR, 47(5), 1287–1294. https://doi.org/doi:10.2307/1911963 Darmi, T. (2018). Locally-Generated Revenue as A Capacity Parameters of New Regional Autonomy Management. JKAP (Jurnal Kebijakan Dan Administrasi Publik), 22(1), 1. https://doi.org/10.22146/jkap.24870 Domar, E. D. (1946). Capital Expansion, Rate of Growth, and Employment. Econometrica, 14(2), 137–147. https://doi.org/10.2307/1905364 Faguet J. Paul. (2004). Does decentralization increase government responsiveness to local needs? Evidence from Bolivia. Journal of Public Economics, 88(3–4), 867–893. https://doi.org/10.1016/S0047-2727(02)00185-8 Fossati, D. (2016). Is Indonesian local government accountable to the poor? Evidence from health policy implementation. Journal of East Asian Studies, 16(3), 307–330. https://doi.org/10.1017/jea.2016.17 Getis, A. (2007). Reflections on spatial autocorrelation. Regional Science and Urban Economics, 37(4), 491–496. https://doi.org/10.1016/j.regsciurbeco.2007.04.005 Guritno Danur Condro, Samudro Bhimo Rizky, S. A. Ma. (2018). Does the Political Dynasty Cause Poverty? JEJAK: Jurnal Ekonomi Dan Kebijakan, 11(2), 429–446. https://doi.org/10.15294/jejak.v11i2.16062 Harrod, R. F. (1939). An Essay in Dynamic Theory. The Economic Journal, 49(139), 14–33. https://doi.org/10.2307/2225181 Hartman, L. M., & Seckler, D. (1967). Towards the application of dynamic growth theory of regions. Journal of Regional Science, 7(2), 167–174. https://doi.org/10.1111/j.1467-9787.1967.tb01433.x Jütting, J. P., Kauffmann, C., McDonnell, I., Osterrieder, H., Pinaud, N., & Wegner, L. (2011). Decentralization and Poverty in Developing Countries: Exploring the Impact. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.583762 Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2012). International economics : theory and policy. Policy (ninth, Vol. New York,). PEARSON. Litvack Jennie, Ahmad Junaid, and B. R. (1998). Rethinking Decentralization in Developing Countries. Rethinking Decentralization in Developing Countries. Washington, D.C. 20433, USA. https://doi.org/10.1017/cbo9780511559815 Maharajabdinul, Rahmatia, Hamid Paddu, Abd, N. (2015). Contribution Of Fiscal Decentralization To Poverty Reduction In Eastern Indonesia. IOSR Journal of Business and Management. III, 17(12), 2319–7668. https://doi.org/10.9790/487X-171235360 Martinez-Vazquez, J., Lago-Peñas, S., & Sacchi, A. (2016). the Impact of Fiscal Decentralization: a Survey. Journal of Economic Surveys, 31(4), 1095–1129. https://doi.org/10.1111/joes.12182 Nurfitriani, N., & Hartarto, R. B. (2018). Does More Spending on Education Matter to Human Capital Formation? Study Case of Bengkulu Province, Indonesia. JKAP (Jurnal Kebijakan Dan Administrasi Publik), 22(1), 63. https://doi.org/10.22146/jkap.33427 Pesaran H., M. (2004). General diagnostic tests for cross-section dependence in panels. Faculty of Economics, (1240), 1–39. https://doi.org/Doi.org/10.17863/CAM.5113 Ramírez, J. M., Díaz, Y., & Bedoya, J. G. (2017). Property Tax Revenues and Multidimensional Poverty Reduction in Colombia: A Spatial Approach. World Development. https://doi.org/10.1016/j.worlddev.2017.02.005 Sarafidis, V., & Wansbeek, T. (2012). Cross-sectional Dependence in Panel Data Analysis. Econometric Reviews, 31(5), 483–531. https://doi.org/10.1080/07474938.2011.611458 Sepulveda, C. F., & Martinez-Vazquez, J. (2011). The consequences of fiscal decentralization on poverty and income equality. Environment and Planning C: Government and Policy, 29(2), 321–343. https://doi.org/10.1068/c1033r Silas, M. peter, H.W.W, N., & Okelo, Peres A. O. (2018). Effects of Fiscal Decentralization on Poverty Reduction in Kenya. International Journal of Innovation Education and Research., 6(1), 213–230. Retrieved from http://ijier.net/ijier/article/view/937 Soejoto, A., Subroto, W. T., & Suyanto. (2015). Fiscal decentralization policy in promoting Indonesia's human development. International Journal of Economics and Financial Issues, 5(3), 763–771. Tobler, W. R. (1970). A Computer Movie Simulating Urban Growth in the Detroit Region. Economic Geography. https://doi.org/10.2307/143141 Valaris, N. (2012). Fiscal Decentralization and Its Effect on Poverty Evidence from Panel Data on the lower 48 American States. ISU ReD: Research and Data, 8, 1–22.



DOI: https://doi.org/10.22146/jkap.54803

Article Metrics

Abstract views : 3441 | views : 4059

Refbacks

  • There are currently no refbacks.




Copyright (c) 2020 JKAP (Jurnal Kebijakan dan Administrasi Publik)

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