ACDE Trade & Development Seminars

by Arndt-Corden Department of Economic, Crawford School of Public Policy, ANU.

Topic: Bringing government closer to the people? Indonesia’s flawed decentralisation experiment.

Speaker: Ross H McLeod, Arndt-Corden Department of Economics.

Date and Time: Tuesday 28 February 2017, 2-3pm.

Venue: Coombs Seminar Room B, Coombs Building 9, Fellows Road, ANU.


Indonesia’s recently adopted decentralisation arrangements, intended to ‘bring government closer to the people’, fail from the point of view of both efficiency and equity. Moreover, they virtually guarantee that the constitutional requirements of equal access to basic education and health care—delivery of which is now the responsibility of local governments—will not be achieved. The key features of an alternative set of multi-tier governance policies to overcome these flaws include substituting contractual payments from the central government to local governments for delivery of education and health care (rather than relying on untied transfers), and a general requirement for sub-national governments (SNGs) to be otherwise fiscally self-sufficient—except to the extent the central government chooses to use transfers to SNGs as an additional instrument for income redistribution. Such transfers should conform to the principles of horizontal and vertical equity, interpreted in terms of the representative individual in each jurisdiction.

More details can be found here.

Comments are closed.