DOES FISCAL DECENTRALIZATION CONTRIBUTE TO REGIONAL ECONOMIC GROWTH? AN EMPIRICAL ANALYSIS ON INDONESIA
Bobby Owens Parinduri, Professor GOTO Daisaku
2012 | Tesis | S2 Magister Ek.Pembangunan-
The purposes of this thesis are to determine the contribution of fiscal decentralization on regional economic growth within the framework of the degree of fiscal decentralization between the district and provincial levels in Indonesia for the 2005-2010 periods, and provide policy recommendations based on the empirical findings. By using panel data analysis, this study employs three measurement of the degree of fiscal decentralization: Revenue Indicator, Production Indicator, and Autonomy Indicator. Since 2001, Indonesia has been implemented decentralization and rapidly moving the country from one of the most centralized systems in the world to one of the most decentralized ones. However, political circumstances in 1998-1999 in Indonesia dominated the decision of the degree of fiscal decentralization to the district and provincial levels. In this new system, district governments get greater autonomy than province government. Fiscal decentralization in Indonesia mainly focuses on expenditure assignment. There is only slight change before and after fiscal decentralization for revenue side; because significant taxes such as income tax, value added tax, and property tax still under control of central government. The research findings show that a further degree of decentralization in district government spending may be harmful for regional economic growth; whereas empowering the district governments to raise their own revenue and have less dependence on intergovernmental transfer will have a positive impact for regional economic growth.
Kata Kunci : Fiscal decentralization, regional economic growth, district and provincial levels, panel data analysis, Indonesia
