Starting in 2001 the Government of Indonesia employed the Regional Autonomy Law, providing larger fiscal role to the province and district governments. However, our understanding of its impacts on development in Indonesia is still limited. This paper seeks to find the relationship between increasing local governments’ capital expenditure and industrial development with focus in the non-oil and gas sector. Capital spending is thought to have moderation effect on investment, the main channel for industrialization, that should contribute to industrial growth. Our System GMM results suggest that there are positive and significant correlations between capital spending and industrial growth, presenting evidence of local governments’ role. However, we fail to find significant moderation effect between local capital spending and industrial investment towards the sector’s growth. This poses problem for industrialization at the local level. Decentralization progress in Indonesia has been institutionally anchored by the central government, particularly with the introduction of concurrent affairs in 2004 that allowed Jakarta to take a major developmental role in districts and provinces at the cost of lesser local governments’ role. Our study proposes a new institutional model that promote better central–local collaboration.

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Swamp reclamation project that had been carried out by the Government of Indonesia in Sumatra and ABSTRAKReklamasi rawa yang dilakukan Pemerintah Indonesia di Pulau Sumatera dan Kalimantan beberapa dekade lalu pada dasarnya ditujukan untuk mendukung ketahanan pangan nasional dan program transmigrasi. Namun sampai saat ini ternyata kontribusi ketahanan pangan dari pertanian lahan rawa masih sangat rendah. Justru akhir-akhir ini marak terjadi pengalihfungsian lahan rawa beririgasi untuk peruntukan lain, seperti perkebunan kelapa sawit dan karet. Daerah rawa pasang surut Belawang (Barito Kuala) adalah salah satu wilayah yang mulai marak mengalami perubahan pemanfaatan lahan beririgasi menjadi perkebunan karet. Banyak faktor yang menyebabkan hal ini terjadi. Penelitian ini mengkaji faktor-faktor penting yang menyebabkan terjadinya alih fungsi lahan dan menyusun strategi upaya mendorong peranan lahan rawa beririgasi dalam mendukung ketahanan pangan. Penelitian yang dilakukan tahun 2014 ini dilakukan dengan pendekatan kuantitatif dengan metode analisis SWOT. Pengumpulan data dilakukan dengan teknik wawancara mendalam kepada informan-informan kunci. Hasil penelitian merekomendasikan strategi pengembangan lahan beririgasi rawa di Belawang harus dilakukan dengan cara pemetaan kembali tipe lahan rawa yang sesuai untuk tanaman pangan maupun untuk perkebunan. Selanjutnya teknik diversifikasi komoditas secara terpola menjadi solusi menjawab ketahanan pangan dan kebutuhan ekonomis masyarakat lokal.Kata kunci: irigasi pasang surut, alih fungsi lahan, strategi, tanaman pangan, perkebunan

Starting in the second round of local election, participation of millenials has been increasing. The term refers to the young demographic cohort born between 1980 and 2002, known to have distinct characteristics to the previous generations. We gathered seventeen cases of elected millennial district heads between 2010 and 2017 and making an early observation of their impact on human capital development. Simplified difference-in-difference estimation method is applied using province average as the control group. Results show that following the winning of the millennial leaders there is a diverging trend of Human Development Index score at 0.03 and 0.07 in the first and second year, consecutively, before started converging around the third and fourth year. Lacking leadership skills and experiences, that may also be perpetrated by generational gap, are among the contributing factors to the problem. We further find that leaders not affiliated with political dynasty fare better. We check the robustness of our result using poverty data and further find that millennial leaders are also under-perform in combating poverty. This early assessment would benefit from further heterogeneity analyses as well as narrowing the control group, which is our recommendation for future research.

Starting in 2001 the government of Indonesia employed Regional Autonomy law, providing larger fiscal role to the province and district governments. However, our understanding of its impacts on economic development of Indonesia is still limited. This paper seeks to find the relationship between increasing local government’s capital expenditure on industrial development with focus in the non-oil and gas sector. Capital spending is thought to have moderation effect on investment, the main channel for industrialization, that should contribute to industrial growth. Our System GMM result suggests that there is significant correlation between capital spending and industrial growth. However, we fail to find significance moderation effect between local spending and investment towards the industry. Decentralization progress in Indonesia has been institutionally anchored by the central government particularly with the introduction of concurrent affairs in 2004, allowing central government to take a major developmental role at the local level. In the long run this contributes to the weakening capacity building at the local level, resulting in our non-positive findings. We propose a new institutional model that promote better central-local collaboration.