Analysis of Direct and Indirect Effects of Fiscal Decentralization on Regional Disparity (Case Study of Provinces in Eastern and Western of Indonesia, 2006-2015)

Abstract

This study aimed to examine the direct and indirect effects of fiscal decentralization on

Spatial Redistributions of Regional Economic Activity in Central Java (Direct Error Correction Model Causality Approach)

“…Between-regional inequality is decomposed into subgroups including income, other diverse unit characteristics and heterogeneity which give rise to between-regional trends in inequality and inter-sectoral economics in an area (Kuncoro, 2011;Ramos & Coimbra, 2009). Some studies of inequality at different levels, ranging from international inequality (Ezcurra & Pascual, 2008;Habanik, Hostak, & Kutik, 2013;Postoiu & Bușega, 2015;Rodriguez-Pose & Ezcurra, 2010), inter-province outside of Indonesia (Antonescu, 2012;Bonet, 2006;Fitrawaty, Maipita, Hermawan, & Rahman, 2018;Islam & Noman, 2015;Wijerathna, Bandara, Smith, & Naranpanawa, 2014), inter-province in Indonesia (Aritenang, 2014;Fadli, 2014;Mahardiki & Santoso, 2013;Zakaria, 2013), inter-city outside of Java Island (Arham, 2014;Baransano, Putri, Achsani, & Kolopaking, 2016;Yuliani, 2015), Inter-city in Java Island (Abdulah, 2013;Kurniawan & Sugiyanto, 2013), regional (Cahyono, Subroto, & Anwar, 2017;Suseno, 2015) and inter-sub-district in a city (Nugroho, 2014). There is also research on pre-post-crisis inequality (Đoki, Fröhlich, & Bakaric, 2016), inequality after regional expansion (Dhyatmika & Atmanti, 2013) and differences in the conditions of inequality in origin district and newdistrict (Panjawa, Samudro, & Soesilo, 2018).…”

“…Studies on economic growth and inequality have different results. Increased economic growth will also exacerbate between-regional inequality (Fadli, 2014;Zakaria, 2013). Contradictory results indicate that high economic growth is believed to be able to improve welfare and minimize inequality between regions (Antonescu, 2012;Yuliani, 2015).…”

The Role of Human Development and Decentralization toward Poverty Through Economic Growth

“…Efisiensi ekonomi yang besar dalam pendistribusian sumber daya antar sektor dapat diwujudkan adanya desentralisasi fiskal. Mengingat bahwa desentralisasi fiskal mampu memperbaiki efisiensi ekonomi setelah pemerintah daerah lebih dekat dan cepat tanggap akan kebutuhan dan preferensi untuk masyarakat lokal dari pada pemerintah pusat dalam meningkatkan kesejahteraan masyarakat (Fadli, 2014). Kontradiksi akan peran desentralisasi muncul akibat dari penerapan desentralisasi fiskal dalam upaya untuk mengurangi kemiskinan cenderung untuk menutup defisit anggaran, dan menarik anggaran pemerintah pusat untuk menutupi kekurangan tersebut.…”

The Impacts of Fiscal Decentralization on the Quality of Government in China: A Test of Market-Preserving Federalism at the Provincial Level

“…Using spatial analysis to study the districts in Indonesia between 1994, Aritenang (2014 finds that there is evidence of spatial autocorrelation and that the regional convergence rate is higher in the decentralization period. Fadli (2014) examines the direct and indirect effects of fiscal decentralization on the regional disparity in eastern and western Indonesia (2006Indonesia ( -2012 through studying economic growth and find no direct effect. Using an econometric approach, Harouche and Bougantouche (2015) investigate the effects of fiscal decentralization and budget deconcentration on the regional disparities in Morocco between 2002 and 2011 and find that the impacts are related to budget deconcentration when it is combined with the fiscal decentralization.…”