Category - Anisah ALFADA

Waseda University, Japan


Fiscal Decentralization and Government Expenditure Efficiency in Indonesia: A Malmquist Productivity Index

This research examines regional government performance in Indonesia’s provinces after the implementation of fiscal decentralization in 2001 using a two-stage approach. First, extensive input and output data are utilized to measure government productivity and efficiency indices using a Malmquist productivity index (MPI) for four significant expenditures for the 2004-2015 period: infrastructure, education, health and social protection. Second, the relationship between the degree of fiscal decentralization and the first-stage productivity scores is analyzed using a Tobit model. This study provides extensive and internationally comparable data that distinguish it from existing studies in Indonesia because appropriate input and output data are the significant elements in measuring government expenditure efficiency. From the estimation results, the degree of fiscal decentralization is found to promote government expenditure efficiency. Tax revenue collected by regional governments will...

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