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Regional Development Dynamics In Indonesia Before And After The ‘Big Bang’ Decentralization

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  • HAL HILL

    (Australian National University, Canberra ACT0200, Australia)

  • YOGI VIDYATTAMA

    (The National Centre for Social and Economic Modeling (NATSEM), Institute for Governance and Policy Analysis (IJPA), University of Canberra, Building 24, University Drive South, Bruce, ACT, 2617, Australia)

Abstract

Decentralization is in vogue. However, the relationship between decentralization and local-level development dynamics remains unclear. Does decentralization lead to a ‘reform dividend’ of more rapid development in better-governed regions, with attendant national benefits? What is the impact on spatial inequality? In particular, do poorer regions lag further behind as equalizing fiscal policies at the national level weaken? We address these issues with reference to Indonesia, the world’s largest archipelagic nation, which implemented a ‘big bang’ decentralization program in 2001. Our main conclusion, perhaps counterintuitive, is that decentralization had a minimal impact on regional development dynamics, although its political impacts have been far-reaching.

Suggested Citation

  • Hal Hill & Yogi Vidyattama, 2016. "Regional Development Dynamics In Indonesia Before And After The ‘Big Bang’ Decentralization," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(02), pages 1-26, June.
    • Handle: RePEc:wsi:serxxx:v:61:y:2016:i:02:n:s0217590816400270
    DOI: 10.1142/S0217590816400270
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    Cited by:

    1. Armida Alisjahbana & Takahiro Akita, 2020. "Economic Tertiarization and Regional Income Inequality in a Decentralized Indonesia: A Bi-dimensional Inequality Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 151(1), pages 51-80, August.
    2. Hilmawan, Rian & Clark, Jeremy, 2019. "An investigation of the resource curse in Indonesia," Resources Policy, Elsevier, vol. 64(C).
    3. Takahiro Akita & Armida Salsiah Alisjahbana, 2023. "The Initial Impacts of the COVID-19 Pandemic on Regional Economies and Income Inequality in Indonesia: A Bi-dimensional Inequality Decomposition Analysis," Working Papers EMS_2023_02, Research Institute, International University of Japan.
    4. Hal Hill, 2018. "Asia's Third Giant: A Survey of the Indonesian Economy," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 469-499, December.
    5. Hal Hill, 2020. "Indonesian Living Standards over 50 Years: A Multidimensional Analysis," Asian Economic Journal, East Asian Economic Association, vol. 34(3), pages 249-274, September.
    6. Takahiro Akita & Awaludin Aji Riadi & Ali Rizal, 2021. "Fiscal disparities in Indonesia in the decentralization era: Does general allocation fund equalize fiscal revenues?," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(6), pages 1842-1865, December.

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