Fiscal Decentralization and its Effect on Poverty Alleviation: Case Study of Indonesia
DOI:
https://doi.org/10.14421/bie.2022.012-04Keywords:
fiscal decentralization, social development, poverty alleviationAbstract
This research provides empirical evidence of the effect of fiscal decentralization on poverty alleviation and used data from 505 districts/cities in Indonesia from 2010 to 2019. The poverty rate is used as an indicator to measure the social condition of the area with the parameter of the percentage of the total population below the poverty line, while the fiscal decentralization indicator uses approach to the size of the ratio of PAD to total regional income and expenditure. The estimated results used the fixed effect model shows that fiscal decentralization have significant role to reduce the level of poverty in districts/cities nationally. From this estimation result, the recommended policy formulation is pro-poor fiscal decentralization through strengthening regional financial capacity, both optimizing Original Local Government Revenue (PAD), allocating Transfer Funds to Regions that are specific grants, improving the quality of spending and regional financial management, as well as mechanisms monitoring - better evaluation. In addition, the effectiveness and efficiency of regional government policies in dealing with socio-economic issues such as unemployment and growth population must also be considered.
Abstract viewed: 104 times
|
PDF downloaded = 107 times
References
Ahmad, E., & Mansoor, A. (2002). Indonesia: managing decentralization. IMF Working Paper.
Ahmed, M. (2013). Fiscal decentralization and political economy of poverty reduction: Theory and evidence from Pakistan. Durham University.
Ahmed, M. (2015). The political economy of decentralisation and access to pro-poor social services delivery in Pakistan. The Pakistan Development Review, 471-484.
Aritenang, A. (2008). A study on Indonesia regions disparity: Post decentralization. MPRA Paper No. 25245.
Banwo, M. A. (2012). Fiscal decentralization policy and poverty reduction: Lessons from Nigeria. IPPR Journal, 7(1), 1-35.
Bird, R. M. (1993). Threading the fiscal labyrinth: Some issues in fiscal decentralization. National Tax Journal, 207-227.
Bird, R. M., & Vaillancourt, F. (1998). Fiscal decentralization countries: An overview. Fiscal Decentralization in Developing Countries, 48-73.
Brinkerhoff, D. W., & Wetterberg, A. (2013). Performance-based public management reforms: Experience and emerging lessons from service delivery improvement in Indonesia. International Review of Administrative Sciences, 79(3), 433-457.
Dasgupta, A., & Beard, V. A. 2007. Community driven development, collective action and elite capture in Indonesia. Development and Change, 38(2), 229-249.
Davoodi, H., & Zou, H. F. (1998). Fiscal decentralization and economic growth: A cross-country study. Journal of Urban Economics, 43(2), 244-257.
Dixon, G., & Hakim, D. 2009. Making Indonesia’s budget decentralization work: The challenge of linking planning and budgeting at the local level. The many faces of public management reform in the Asia-Pacific Region. Research in Public Policy Analysis and Management, 18, 207-245.
Faridi, M. Z., Chaudhry, M. A., & Ansari, F. N. (2012). The impact of fiscal decentralization, inequality and poverty on employment: Evidence from Pakistan. Pakistan Journal of Social Sciences (PJSS). 32(2), 357-369
Faridi, M. Z., & Nazar, R. 2013. Impact of fiscal autonomy on poverty in Pakistan. Pakistan Journal of Commerce and Social Sciences, 7(1), 141-156.
Firman, T. 2008. In search of a governance institution model for Jakarta Metropolitan Area (JMA) under Indonesia's new decentralisation policy: Old problems, new challenges. Public Administration and Development, 28(4), 280-290.
Green, K. 2005. Decentralization and good governance: The case of Indonesia. MPRA Paper No. 18097.
Jegadeesh, N. & Sheridan T., (2000). Profitability of momentum strategies: An evaluation of alternative explanations. Journal of Finance, 49(1): 67-81. https://doi.org/10.1111/0022-1082.00342
Jogiyanto Hartanto. (2017). Teori portofolio dan analisis investasi. BPFE-Yogyakarta.
Jütting, J. P., Kauffmann, C., McDonnell, I., Osterrieder, H., Pinaud, N., & Wegner, L. 2004. Decentralization and poverty in developing countries: Exploring the impact. OECD Development Centre Working Paper No.236.
Kis-Katos, K., & Sjahrir, B. S. (2017). The impact of fiscal and political decentralization on local public investment in Indonesia. Journal of Comparative Economics, 45(2), 344-365.
Kharisma, B. (2013). Desentralisasi fiskal dan pertumbuhan ekonomi: Sebelum dan sesudah era desentralisasi fiskal di Indonesia. Jurnal Ekonomi & Studi Pembangunan, 14(2), 101-119.
Kusumanista, A., I. ( 2014). Faktor-faktor yang mempengaruhi NAB (nilai aktiva bersih) reksadana manulife syariah sektoral amanah pada PT. Manulife Aset Manajemen Indonesia. Skripsi. Yogyakarta: UIN Sunan Kalijaga Yogyakarta.
Kusumaningrum, R. S. D. (2013). Link of fiscal decentralization to poverty reduction: Indonesian context. Jurnal Economia, 9(2), 116-129.
Lewis, M.K. (2010). Accentuating the positive: Governance of Islamic investment funds. Journal of Islamic Accounting and Business Research, 1(1), 42-59. https://doi.org/10.1108/17590811011033406
Maharani, E. & Erman, D.A. (2016). Analisis pengaruh momentum, trading volume dan size terhadap disposition effect dan return aplikasi cross sectional regression (Studi pada Indeks Saham Kompas 100 tahun 2012-2015). Jurnal Manajemen UNDIP, 6(1), 1-15.
Makau, M., M.. (2016). Effect of macroeconomic variables on financial performance of unit trusts in Kenya. Research Journal of Finance and Accounting, 7(14).
Malya, N. (2017). Pengaruh inflasi dan BI rate terhadp portofolio reksadana syariah di Indonesia periode 2011-2015. Skripsi, Lampung: UIN Raden Intan.
Markowitz, H. ( 1952). Portofolio selection. The Journal of Finance, 7(1), 77-91. https://doi.org/10.1111/j.1540-6261.1952.tb01525.x
Martinez-Vazquez, J., & McNab, R. M. 2003. Fiscal decentralization and economic growth. World Development, 31(9), 1597-1616.
Mursyidin, A. (2010). Analisis variabel makroekonomi dan indeks syariah terhadap nilai aktiva bersih reksadana. Jakarta: Skripsi Manajemen FEB UIN Syarif Hidayatulloh.
Miranti, R., Vidyattama, Y., Hansnata, E., Cassells, R., & Duncan, A. 2013. Trends in poverty and inequality in decentralizing Indonesia. OECD Social, Employment and Migration Working Papers, No. 148.
Moche, T. J., Monkam, N., & Aye, G. C. 2014. Fiscal decentralisation and poverty in South Africa: Evidence from panel data analysis. Investment Management and Financial Innovations, 11(2), 69-76.
Nachrowi, D. N., & Usman, H. (2006). Ekonometrika. LPFEUI.
Nandari, H. U. (2017). Pengaruh inflasi, kurs, dan BI rate terhadap nilai aktiva bersih reksa dana Syariah di Indonesia (Periode 2010-2016). An-Nisbah, 4(1).
Oates, W. E. 1993. The role of fiscal decentralization in economic growth. National Tax Journal, 46(2), 236-243.
Othman, A. H. A., Kameel, A., & Aziz, H. A. (2015). Relationship between macroeconomic variables and net asset value (NAV) of Islamic equity unit trust funds: cointegration evidence from Malaysian unit trust Industry. Global Journal of Business and Social Science Review, 1(2), 327-339.
Pepinsky, T. B., & Wihardja, M. M. 2011. Decentralization and economic performance in Indonesia. Journal of East Asian Studies, 11(3), 337-371.
Peralta, S. 2012. Partial fiscal decentralization, local elections, and accountability. Unpublished paper, Nova School of Business and Economics, Lisbon.
Pratiwi, I. Y. ( 2018). Pengaruh inflasi, nilai tukar, BI 7 days repo rate dan return terhadap nilai aktiva bersih reksadana syariah di indonesia periode 2015-2017. Surakarta: IAIN Surakarta.
Putratama, H. (2007). Analisis faktor-faktor yang mempengaruhi perkembangan nilai aktiva bersih di indonesiai. Bogor: Skripsi Institute Pertanian Bogor.
Qoyum, A. (2017). Lembaga Keuangan Islam Di Indonesia. Elmatera Publishing.
Qoyum A., Al Hashfi, R.U., Zusryn A.Z., Kusuma, H., Qizam, I. (2021). Does an Islamic-SRI portfolio really matter? Empirical application of valuation models in Indonesia. Borsa Istanbul Review, 21(2), 105-124. https://doi.org/10.1016/j.bir.2020.08.002
Rachman, A., & Mawardi, I. (2015). Pengaruh inflasi, nilai tukar rupiah, BI rate terhadap net asset value reksa dana saham syariah. JEST, 2(12).
Satterthwaite, D. 2003. The ten and a half myths that may distort the urban policies of governments and international agencies. International Institute for Environment and Development, London.
SEADI. 2013. Provincial poverty rates in Indonesia. USAID.
Sepulveda, C. F., & Martinez-Vazquez, J. 2010. The consequences of fiscal decentralization on poverty and income inequality. Georgia State University.
Septiana, F. (2017). Pengaruh inflasi, IHSG, jumlah reksa dana syariah dan tingkat return terhadap total nilai aktiva bersih (NAB) reksa dana syariah di indonesia. Skripsi UIN Syarif Hidayatullah.
Shah, A., & Chaudhry, T. T. 2004. Implementing decentralized local governance: a treacherous road with potholes, detours, and road closures. World Bank Policy Research Working Paper (3353).
Shahzad, S., & Yasmin, B. (2016). Does fiscal decentralisation matter for poverty and income inequality in Pakistan? The Pakistan Development Review, 781-802.
Siburian, M. E. (2020). Fiscal decentralization, regional income inequality, and the provision of local public goods: Evidence from Indonesia (No. 2001).
Smoke, P. J. (2001). Fiscal decentralization in developing countries: A review of current concepts and practice. Geneva: United Nations Research Institute for Social Development.
Steiner, S. 2005. Decentralisation and poverty reduction: A conceptual framework for the economic impact. GIGA Working Paper No 3.
Sunariyah. (2011). Pengantar pengetahuan pasar modal. UPP STIM YKPN.
Tandelilin, E. (2001). Analisa investasi dan manajemen portofolio. BPFE-Yogyakarta.
Thornton, J. 2007. Fiscal decentralization and economic growth reconsidered. Journal of urban economics, 61(1), 64-70.
Tricahyadinata, I. (2016). Indeks harga saham gabungan (IHSG) dan Jakarta interbank offered rate (JIBOR): Kinerja reksadana campuran, Jurnal Ekonomi Keuangan dan Manajemen, 12(2).
Von Braun, J., & Grote, U. 2000. Does decentralization serve the poor? In International Monetary Fund Conference on Fiscal Decentralization. Washington, DC, November (pp. 20- 21).
Yao, G. A. (2007). Fiscal decentralization and poverty reduction outcomes: Theory and evidence.
Zakaria, S. 2013. The impact of fiscal decentralization toward regional inequalities in eastern region of Indonesia. Journal of Economics and Sustainable Development, 4(10), 74-84.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Bulletin of Islamic Economics is licensed under a
Creative Commons Attribution-ShareAlike 4.0 International License
