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Assessing the Local Government Efficiency: Evidence from Sumatra, Indonesia

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  • Rambe, Roosemarina Anggraini
  • Wibowo, Kodrat
  • Febriani, Ratu Eva
  • Septriani, Septriani

Abstract

The purposes of this research were to assess the relative efficiency of local government spending in Sumatra, Indonesia and to analyze the determinants of this efficiency. Data Envelopment Analysis (DEA) and multiple regression were employed for a data set of the spending of 154 local governments in 2016. Three inputs were used to measure the relative efficiency: (i) direct personnel spending per capita, (ii) spending on goods and services per capita, and (iii) capital spending per capita. The two outputs applied were life expectancy and years of schooling. The results show that, of the 154 local governments, 16, across eight provinces in Sumatra, were relatively efficient. Furthermore, population density and per capita gross regional domestic product significantly and positively affected local government efficiency. However, the general purposes grant per capita did not affect local government efficiency. Regional expansion did not cause the new split-region governments to be more relatively efficient than the governments of their parent regions.

Suggested Citation

  • Rambe, Roosemarina Anggraini & Wibowo, Kodrat & Febriani, Ratu Eva & Septriani, Septriani, 2020. "Assessing the Local Government Efficiency: Evidence from Sumatra, Indonesia," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 27(2).
    • Handle: RePEc:ags:thkase:334397
    DOI: 10.22004/ag.econ.334397
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