Political competition and economic performance: evidence from Indonesia

Abstract

This paper analyses the impact of political competition on district government performance in Indonesia. This study uses a new database that covers 427 districts in Indonesia, from 2000 to 2013. Political competition is measured using the Herfindahl Hirschman Concentration Index for the district parliament election. This variable is potentially endogenous, because political competition is likely to be non-random and correlated with unobservable variables. To solve this problem, I use the lag of the average political competition within the same province and the political competition from the 1955 general election, as instrumental variables for political competition. The degree of political competition has been found to boost real Regional Gross Domestic Product (RGDP) per capita and RGDP growth by 3.24% and 1.11%, respectively . This study also find that stiffer political competition is associated with higher public spending (e.g. infrastructure spending) and pro-business policies.

One Size Does Not Fit All: The Heterogenous Impact of Democracy on Economic Growth in Indonesia

“…Meanwhile, the level of democracy in the district has not been deemed. In fact, as found in Rezki (2022), Abeberese et al (2021), andKis-Katos &Sjahrir (2017), political decentralization and the formulation of regional economic policies are predominantly determined at the district level in Indonesia. As a result, measuring the impact of democracy at the district level is critical in order to serve as a reference point when developing policies to improve the quality of democracy.…”

“…This argument is supported by the research of Abeberese et al (2021), who unearthed that improving governance in the era of decentralization in Indonesia, such as improving the quality of business regulations, has encouraged an increase in firm productivity, resulting in a faster local economy. Rezki (2022) brings that democracy, as reflected in political competition, has the opportunity to increase per capita income in line with the growing role of the modern sector with high added value. This is because political competition provides a check and balance mechanism that allows the best economic policy to be presented.…”

Energy Policy and Climate Change: Challenges for Public Sector Organizations in South Sulawesi

“…Public region agencies are responsible for the strategic making plans and system of electricity guidelines that align with each national priorities and local goals. In South Sulawesi, this includes translating Indonesia's broader strength policy directives, together with the ones mentioned in the National Energy Policy (KEN) and the National Energy General Plan (RUEN), into actionable local strategies (Rezki et al, 2023). These plans should don't forget the precise socio-monetary and environmental contexts of South Sulawesi, balancing the need for economic boom with environmental sustainability.…”