APAKAH TATA KELOLA PEREKONOMIAN DAERAH DI INDONESIA TELAH MENINGKAT?

Governance has gone through radical changes over the last twenty five years. Seemingly, it became one of the important strategies, processes, methods and mechanisms in governing countries to achieve economic development goals. The objective of this paper is to observe the local economic governance dynamics in the case of districts/municipalities in Indonesia. First, the dynamics behavior of local governance over time is analyzed by visual inspection of their non-parametric density distribution. More deeply, we use Markov chains to predict a pattern of change in local economic governance toward its steady state. Based on comparison between 2007 and 2011 data delivered by Commission of Regional Autonomy Implementation Watch, we conclude that there is a high level of persistence in the relative position of local governance index, consistent with a low degree of mobility in the index distribution implying the implementation of governance in the districts/municipalities in Indonesia is weak enough. This finding implies that the local economic governance is a key to achieve sustainable regional economic growth in line with fiscal decentralization and regional autonomy. Keywords : Local Economic Governance, Decentralization, Regional Economic Growth, Kernel Densities, Markov ChainsJEL Classification: H70, O43, O56

Abstract:Local economic governance plays an important role in the development of the business sector. To assess its impact on business sector growth in Vietnam, this empirical study is conducted at the local level with all 63 provinces nationwide in the period from 2006 to 2014. The Provincial Competitiveness Index (PCI) is used as a measurement for local economic governance. The finding reveals that overall the PCI has a positive effect on growth in the number of enterprises and output generated in the business sector. At the sub-index level, 5 indicators show positive effects with labor training having the largest impact, followed by time costs of regulatory compliance, informal charges, transparency and finally business support service. Land access and security of tenure and proactivity of the provincial leadership unexpectedly show negative effects while the other 2 indicators, including entry cost for new firms and legal institutions, have no significant impact on business sector growth.
 Keywords
 Local economic governance, Provincial Competitiveness Index, business sector growth
 

This paper explores the rise of local economic governance in Britain. It argues that local economic governance is associated with the rise of non‐elected state forms and a multitude of partnership arrangements involving the public and private sector. This modus operandi is to be contrasted with economic government — the traditional method of managing the local state through the organisational forms of local government. Using the analytical tools of regulation theory, the paper unravels some of the problems caused by the implementation of local economic governance — namely public accountability (resulting from implementation confusion and leading to a democratic deficit), and funding (resulting from performance‐based management and fostering short‐termism, leading to partnership friction). The paper illustrates these issues by way of a discussion on two contemporary, local economic policy experiments — Business Link and the Single Regeneration Budget.

In Jamaica, a “new” local governance framework comprises a federated system of development committees (community development committees [CDCs], development area committees [DACs], and parish development committees [PDCs]) purportedly working in partnership with local authorities. Local governance is thus premised on the idea that utilization of local skills, knowledge, assets, and initiatives will lead to economic transformation. Focus has also shifted to micro, small and medium enterprises (MSMEs), given their local embeddedness and potential to foster local economic growth. This chapter investigates the extent to which local economic development (LED) model implementation is supported by appropriate governance structures. It argues that implementation of an LED model represents a decisive shift from local governance to local economic governance, which currently lacks a cohesive policy framework. The consequent effect is nothing more than atomized organizational actions that engender competition among localities and communities rather than a clear growth strategy at the local level.

In Jamaica, a “new” local governance framework comprises a federated system of development committees (community development committees [CDCs], development area committees [DACs], and parish development committees [PDCs]) purportedly working in partnership with local authorities. Local governance is thus premised on the idea that utilization of local skills, knowledge, assets, and initiatives will lead to economic transformation. Focus has also shifted to micro, small and medium enterprises (MSMEs), given their local embeddedness and potential to foster local economic growth. This chapter investigates the extent to which local economic development (LED) model implementation is supported by appropriate governance structures. It argues that implementation of an LED model represents a decisive shift from local governance to local economic governance, which currently lacks a cohesive policy framework. The consequent effect is nothing more than atomized organizational actions that engender competition among localities and communities rather than a clear growth strategy at the local level.

Managerialism, governmentality and the state: a neo-Foucauldian approach to local economic governance

Empirical analyses of the activities and perceptions of a broad range of local authorities confirms the view that recent years have witnessed two key changes in local economic governance in the UK. First, the privileging of business interests by both European and domestic policy agendas has offered the private sector a far greater role in local regeneration partnerships. While there are doubts about the ability or willingness of businesses to make a meaningful contribution at the local level, the neoliberal agenda which has dominated policy making at the European level has had an important influence over the overall size and shape of the EU's structural funds. Second, local regeneration strategies have become increasingly dependent on EU programmes. This has provided the European Commission with greater influence over regeneration strategies in particular enabling it to encourage regional alliances between authorities. However, the overall pattern of local authorities' activity suggests that this has not led to the radical realignment of central-local relations envisaged by theories of multi-level governance. The strong 'gatekeeper' role of central government has meant that EU programmes have usually taken on a distinctly British flavour and that both the vertical and horizontal partnerships which have emerged in the UK have reflected a particular interpretation by central government of the principles embodied in the structural fund regulations. Very few British local authorities expect, or even aspire, to influence EU policy agendas. Current patterns of local economic governance in Britain are therefore best seen as the product of an increasingly fragmented European polity in which the power of local authorities has declined, the European Commission's influence has grown but central government has been able to retain a dominant position.

Applying a non-linear political economy analysis of power balances, institutional mechanisms, and elite structures, this study sheds light on the characteristics of Medellín’s economic development since the early 2000s. Elites with minimal technological capabilities and interests in promoting the advancement of transnational capitalism have successfully secured access to sources of power. These conditions (re)produce neoliberal logics of local governance that focus on economic growth in sectors with perceived global comparative advantages and on sustaining the particular power balances in Medellín’s political settlement. This has led to failures of generating positive forward and backward linkages for productivity growth of local firms, a local labour market marked by low wages and high employment elasticities, and large income inequalities. The local governance model that perpetuates productivity and inequality problems of the city is adopted as an opportunistic discourse of Medellín’s transnationalised capitalist elite in the larger neoliberal context of Colombia’s polity and economic policy agenda. In the absence of structural reforms targeting low wages and incentivising firms to develop technological capabilities, Medellín’s low productivity and high inequality problems are likely to persist.

This papers derives from the project 'Citizens and Governance in the Knowledge-based Society', forming part of the New Modes of Governance (NewGov) Integrated Project under the European Commission’s Framework Six Programme, co-ordinated by the European University Institute, Florence, and its Robert Schuman Centre for Advanced Studies. In 2005 ca. 70 face-to-face interviews were conducted with local entrepreneurs; representatives of local authorities; representatives of the Municipality of the two case studies; representatives of regional authorities; researchers from the University; experts from regional Chamber of Commerce and Industry. The interviews were semistructured, with an interview guide based on an inventory of issues. However, the discursive nature of interviews was preserved, which allowed the interviewees to raise additional issues. Secondary sources were also extensively used in the research, using local newspaper, documents, research reports, as well as documents from local public and private institutions, such as the local government or employers associations, and a secondary analysis of quantitative data was carried out.

In Sri Lanka, the role of local authority is important today more than ever after the government aligned its development agenda with United Nation’s Millennium Development Goals and implemented local economic governance (LEG) program. LEG program envisaged to build public-private partnerships at the local authority level. As part of the LEG program, the Asia Foundation (TAF) carried out economic governance index (EGI) study in 19 local authorities to understand government-influenced constraints to economic growth at the local level. Based on the findings, TAF introduced regulatory mapping to inform the public and business community about the services, authority, and responsibilities of local authorities and their role in creating an enabling environment for private enterprises to flourish. According to EGI study, Puttalam has the weakest urban council (UC) among the 48 local authorities which were selected for the study. This chapter evaluates the present performance of Puttalam Urban Council using the ten subindices of EGI study. It was presumed that the impact made by the intervention could be conspicuous in a locality where the pre-intervention performance is weak. The study also used a topic guide to facilitate focus group discussions to capture qualitative outcomes and challenges. Further, this chapter also examines the regulatory mapping process along with its strengths as an innovative tool.

The article contains a concept about Political and fiscal decentralization problem in Georgia during “2012-2019” For each democratic state strong local government and its political and fiscal decentralization is a fundamental principle of democracy. A local government is a form of public administration which, in a majority of contexts, exists as the lowest tier of administration within a given state. It contains political, fiscal and administration decentralization which means to transfer power from central government to municipality. In the way of Democracy and European integration as a still democracy development county, Local Government development and its Political and fiscal decentralization is an important and key issues for Georgia. Aim of the Article: To analyze the process and the problem of Political and Fiscal decentralization of Local Government in Georgia during 2012-2019. What type of problem we have and what is the main problem for Political and Fiscal decentralization of Local Government in Georgia. Despite all of reforms from independence to nowadays, political and fiscal decentralization of local Government is a problem for all governments in Georgia. The main reason for all of them was political control under the Local governments. After 2012, the hope that the new Government can implement real political da fiscal decentralization of local government was big. But reality is different. Despite two reforms of Local Government during 2012-2019, until now the problem of political and fiscal decentralization in Georgia is the same: no formal control of Local Governments, Most of Financial resources still have central Government, Local Governmnts have no possibility to implement their power independently, they have no own property and sufficient financial resources. In this article we give a recommendations how to improve political and fiscal decentralization aspects in Geogria and what the main problem is.

Since entering the Reformation era, Indonesia has entered a new era in the government system, where most of the affairs for basic services that were previously in the hands of the central government are devolved through decentralization policies, which are also referred to as regional autonomy policies. Regional development in the autonomy era provides an opportunity for local governments to innovate by building local growth centers to encourage regional economic growth. In practice, Indonesia adoptsasymmetric decentralization, which in principle can be based on conditions: (1) administrative (management), (2) political, and (3) fiscal. Regarding fiscal decentralization, starting from the regime of Law 25/1999, Law 33/2004, to Law 1/2022, the central role of fiscal decentralization from the beginning aimed to support the financing of devolved affairs, known as the Money Follows Functions principle. The fiscal decentralization policy provides certainty that the devolved affairs can be properly implemented by the Local Government. However, in its empirical dynamics, during the 23 years that regional autonomy has been implemented, at least there are various problems originating from regulations and local governments themselves, which result in inefficiencies in regional spending. Starting from the effect of incumbent spending allocations in regional head elections (pilkada), known as the political budget cycle (PBC) effect; weak local government governance that causes inefficiencies in regional financial management; central and regional budgeting support that has not been optimal in implementation; to the biggest problem, namely the problem of corruption of the Regional Budget by the definitive Regional Head and the ranks of the regional government. This research uses a normative juridical approach method with a statutory approach accompanied by an analytical descriptive case approach. The type of data is secondary data collected and studied using literature studies and analyzed using qualitative analysis methods. The results and discussion of this study conclude, First, it cannot be denied that corruption drastically distorts fiscal decentralization in the regions. It is estimated that about 30 percent of Anggaran Pendapatan dan Belanja (APBD) funds evaporate due to corruption, and about 70 percent of them occur in the procurement of government goods and services. the emergence of APBD corruption is weak planning and budgeting. There are several sectors that are vulnerable to potential corruption, especially in expenditures sourced from the Transfer to Regional Funds, Village Funds and Deconcentration Funds, which have implications for the high cost economy. Second, the ideal formulation used to inhibit the potential for corruption in the regions, especially the APBD, includes optimizing the implementation of fraud audits such as investigative audits or corruption audits, creating an internal whistleblowing system for local governments, improving the regional budgeting system, and strengthening the Government Internal Supervisory Apparatus. In terms of encouraging sustainable regional development governance, policy recommendations are needed, including: increasing sustainable public transparency; considering results-based accountability; making extensive use of ICT (Information and Communication Technology); increasing the role of reward and penalty mechanisms; and changing the paradigm from money follows function to money follows program. Keywords: Fiscal Decentralization; Corruption; APBD

Background: Past changes in Polish local and regional governments’ financial autonomy give rise to the question whether local and regional governments in Poland still have sufficient finan­cial autonomy to perform in line with the requirements of the principle of subsidiarity. Dimen­sions of special concern are revenue as well as selected recent legislation changes’ potential future impact on Polish local and regional governments’ financial autonomy in terms of both revenue and expenditure. Research purpose: The main objective of the article is to reflect upon the notion of local and regional self-governance, and to critically assess the current degree of financial autonomy of local and regional governments in Poland. Methods: The article starts with a review of literature covering key concepts – subsidiarity, fiscal decentralisation, and local governments’ financial autonomy. Some of the approaches used to operationalise and measure financial autonomy are also highlighted and later used in the analysis and discussion. Conclusions: The article ends with a call for general debate on the future of local and regional governments in Poland as the past trends and expected future developments – in light of discussed legislation changes as well as the potential impacts of the covid-19 pandemic – demonstrate the gradual erosion of the local governance model, which was founded three decades ago on a prem­ise of strong financial autonomy.

This paper aims to explore the Spanish geographical dynamics of per capita income among provinces, during the period 1955-1997. First, we obtain some preliminary evidence of their behavior over time from the visual inspection of their non-parametric density distributions. These distributions turn to be unimodal in virtually all cases. Next, we compute the transition matrices and the long run equilibria by means of the Markov Chain's approach, (along the lines of the contributions of Quah). Basic outcomes of this analysis also tend to predict a patter of convergence among provinces for the period 1955-97. Therefore, and according to these results, the existence of twin peaks in Spanish income distribution does not seem to be supported by the empirical evidence presented here. Other tentative conclusions of the paper are the high level of persistence in the relative position of provinces, consistent with a low degree of mobility in the income distribution. Notwithstanding this fact, the paper detects some particular changes in the placement of provinces according to their per capita income. More specifically, the richest provinces tend to concentrate gradually in the North-East of the country, which may be attributed, in turn, to externalities linked to localization or to the proximity to the rest of Europe. Sectoral reallocation to the industrial sector also seems to have fostered growth of per capita income in those provinces that have experienced it over time.

Environmental protection is a basic public service that the government must guarantee and is closely related to public health. An important driver of environmental pollution in China is the local government’s pursuit of a rapid economic development while ignoring environmental protection under the Chinese-style fiscal decentralization system. On the basis of the principal–agent theory between the central and local governments, this study analyzes the environmental deterioration caused by the distortion of local government behavior under fiscal decentralization. In addition, using China’s prefecture-level city data from 2014 to 2018, this study empirically estimates the impact of fiscal decentralization on environmental pollution. SO2 emissions and PM2.5 concentrations are used to measure the degree of environmental pollution. Results show that Chinese-style fiscal decentralization exacerbates environmental pollution and that the impact of fiscal decentralization on environmental pollution differs in regions with varying levels of economic development and cultural penetration. Moreover, fiscal decentralization does not significantly impact environmental pollution in eastern China and in those areas influenced by Confucian culture yet aggravates the environmental pollution in central and western China and in those areas that are not affected by Confucian culture. These results offer important policy implications. Clearly dividing the power and financial power between the central and local governments, establishing an environmental governance system compatible with economic incentives, and building an environmental public finance system can alleviate the impact of Chinese-style fiscal decentralization on environmental pollution.