This study aims to analyze the differences, roles, and contributions of central and regional taxes within the Indonesian taxation system. Taxes serve as the primary source of state revenue and play a crucial role in financing development and improving public welfare. Along with the implementation of fiscal decentralization, local governments are granted authority to manage regional taxes in order to enhance fiscal independence. This research employs a qualitative method with a descriptive approach, utilizing library research from various sources such as books, academic journals, and legal regulations. The results indicate that central taxes still dominate state revenue compared to regional taxes, reflecting disparities in regional fiscal capacity. Central taxes function to finance national programs and maintain economic stability, while regional taxes support local development and public services. To optimize tax revenue, strategies such as tax intensification, digitalization of the tax system, regulatory simplification, and improvement of taxpayer compliance are necessary. Therefore, an effective, transparent, and fair taxation system is expected to promote economic growth and equitable development in a sustainable manner.

Beyond case studies: A city-level quantitative analysis of payments for ecosystem services system and atmospheric environmental quality

Adaptive governance in fiscal decentralization: Insight from institutional reform in Banyuwangi Regency, Indonesia

ABSTRACT We examine whether China’s 2014 local government debt-swap program, intended to centralize fiscal control and eliminate off-budget borrowing, paradoxically reinforced subnational fiscal autonomy through implicit fiscal decentralization. Exploiting cross-sectional variation in debt levels identified by the 2013 national audit and employing a difference-in-differences design, we examine how the programme affected infrastructure-related land supply and local financing behaviour. We find that the debt-swap programme significantly increased the supply area of infrastructure land while exerting little effect on land prices, consistent with a supply-side expansion rather than demand shocks. Mechanism analyses show that the programme alleviated repayment pressure and facilitated renewed borrowing through local government financing vehicles, thereby expanding local indebtedness despite the central government’s objective of curbing it. In contrast, we find only limited improvements in expenditure efficiency, fiscal revenue, and GDP. Overall, these findings suggest that the debt-swap programme primarily reshaped intertemporal fiscal constraints rather than imposing durable fiscal discipline. More broadly, the results highlight an institutional paradox of recentralization: policies aimed at constraining subnational borrowing may unintentionally expand local fiscal capacity through alternative channels, thereby reinforcing implicit fiscal decentralization.

Local governments occupy a critical position in democratic governance as the level of government closest to the people. In decentralized political systems, they are expected to facilitate grassroots development, promote citizen participation, and enhance democratic accountability. However, in many developing countries, particularly Nigeria, local government autonomy remains constrained by institutional and political factors embedded within intergovernmental relations. This study examines the relationship between local government autonomy and intergovernmental relations and its implications for grassroots governance and democratic accountability in Nigeria. The paper adopts Democratic Governance Theory as its analytical framework and employs a qualitative research design based on secondary data sources, including scholarly publications, government documents, and policy reports. The study identifies key constitutional and institutional challenges that undermine local government autonomy, particularly the operation of the State Joint Local Government Account (SJLGA) and the dominance of state governments over local councils. Empirical insights from Rivers and Bayelsa States illustrate how fiscal dependence and political interference weaken grassroots governance despite substantial federal allocations. The findings reveal that although decentralization policies aim to strengthen local governance, weak institutional frameworks and limited fiscal autonomy hinder their effectiveness. The study concludes that strengthening local government autonomy through constitutional reforms, improved fiscal decentralization, and enhanced citizen participation is essential for improving grassroots governance and democratic accountability in Nigeria.

ABSTRACT Fiscal decentralization is widely expected to enhance local responsiveness and development outcomes by devolving authority and resources to subnational governments. Yet in many decentralized systems, expanded fiscal authority has not translated into transformative change. This study examines how local public managers make sense of fiscal constraints under constrained fiscal governance arrangements, using qualitative evidence from provincial and district governments in Southeast Sulawesi, Indonesia. Drawing on interviews with senior and mid‐level officials, the analysis shifts attention from fiscal capacity and performance outcomes to how public managers interpret fiscal constraints and frame policy problems. The findings show that fiscal constraints are framed as structural and externally determined; fiscal indicators function mainly as symbols of administrative compliance; and variation in fiscal capacity does not produce corresponding interpretive diversity. These patterns are reinforced through multilevel governance arrangements, particularly provincial mediation. Conceptually, the study introduces cognitive–institutional autonomy to explain how decentralization may expand administrative responsibility without expanding the perceived scope for policy action.

This study aims to analyze the influence of the Special Autonomy Fund (Otsus) and local economic growth on poverty levels in Papua. The study uses a Mix method approach, namely quantitative data with survey methods, Questionnaires and reports on the realization of the Special Autonomy Fund and qualitative data namely interviews. Data analysis techniques include correlation tests and multiple linear regression. The results of the study indicate that Regional Economic Growth is Significantly Correlated with Poverty Alleviation The results of the Pearson correlation test (r = 0.765; p < 0.05) indicate that regional economic growth has a strong and significant relationship with poverty alleviation, the Special Autonomy Fund (Otsus) Has a Significant Impact But Is Not Yet Effective in Poverty Alleviation The results of simple regression show a positive coefficient (B = 0.532), the R Square value is only 25.8%, so the Special Autonomy Fund is only able to explain a quarter of the variation in poverty, while 74.2% is influenced by other factors (human resources, governance, infrastructure, income distribution). The Special Autonomy Fund and local economic growth simultaneously significantly influence poverty reduction, with an R value of 0.856 and an R Square of 0.873, meaning 87.3% of the poverty variable can be explained by these two variables. The Durbin-Watson value of 2.112 indicates no autocorrelation in the model. Partially, the Special Autonomy Fund has a positive and significant effect on improving access to public services and community income, while local economic growth also strengthens poverty reduction. Meskipun lebih dari dua dekade implementasi Otonomi Khusus (Otsus) dan pencairan lebih dari Rp 138,65 triliun, tingkat kemiskinan Papua tetap berada di angka 26,03–34,26% jauh di atas rata-rata nasional menampakkan paradoks mendasar antara desentralisasi fiskal skala besar dan hasil pembangunan inklusif. Studi yang ada telah menilai efektivitas Otsus terutama pada tingkat makro-fiskal, mengabaikan kualitas tata kelola sebagai variabel mediasi yang penting. Studi ini mengatasi kesenjangan tersebut dengan meneliti bagaimana dana Otsus dan pertumbuhan ekonomi lokal secara bersamaan memengaruhi kemiskinan di Papua, menggunakan desain penjelasan sekuensial metode campuran yang menggabungkan regresi linier berganda (n=240) dengan wawancara kualitatif sistematis terhadap informan kunci. Temuan menunjukkan paradoks struktural, peningkatan alokasi Otsus berkorelasi dengan kemiskinan yang lebih tinggi daripada lebih rendah (B=0,532, R²=0,258), suatu pola yang dijelaskan oleh penguasaan dana oleh elit, salah alokasi terhadap pengeluaran administratif dan konsumtif, dan dinamika pertumbuhan yang tidak inklusif. Secara gabungan, Otsus dan pertumbuhan ekonomi lokal menjelaskan 87,3% variasi kemiskinan (R²=0,873), namun pertumbuhan itu sendiri tetap tidak inklusif. Secara teoritis, studi ini menantang asumsi bahwa desentralisasi fiskal secara inheren mengurangi kemiskinan, menunjukkan bahwa kualitas tata kelola adalah kondisi mediasi yang kritis. Implikasi kebijakan menuntut reorientasi alokasi Otsus ke arah pemberdayaan ekonomi berbasis komunitas yang produktif, penganggaran berbasis kinerja, dan penguatan akuntabilitas kelembagaan.

ABSTRACT China’s reform-era economic miracle has sparked intense debate over the role of (de)centralization in its rise. This study complements existing theories that attribute the remarkable growth to fiscal decentralization, career tournaments, or adaptive governance, arguing these frameworks misinterpret causality by overlooking more fundamental drivers. We propose an alternative model centred on the post-mid-1990s export boom in consumer goods manufacturing – a phenomenon propelled by a coordinated central-local ‘race-to-the-bottom’ strategy. Through subsidized industrial land, relaxed labour and environmental regulations, currency undervaluation, and export tax rebates, China attracted global value chains, expanding its manufacturing sector even amid the 1994 fiscal recentralization. While this reform constrained local fiscal incentives, it simultaneously provided the central government with the fiscal space to fund massive export tax rebates and currency interventions essential to the export model. The model further integrates state monopolies in key domains, which enabled significant economic rent extraction. While this approach fuelled rapid growth, it also generated systemic distortions including industrial overcapacity, mounting local government debt, rent-seeking behaviour, coercive land expropriation, inadequate labour and environmental protections, and widening income inequality. Achieving sustainable transition requires dismantling these monopolies and prioritizing inclusive development.

<p>This study examines how fiscal capacity influences public investment in industrial-based regions by analyzing the effects of economic growth, Local Own-Source Revenue (PAD), and the General Allocation Fund (DAU) on local government capital expenditure in Central Java during 2018–2024. While fiscal decentralization studies in Indonesia largely focus on transfer dependency and aggregate provincial performance, limited attention has been given to industrial regions where economic expansion may reshape local fiscal dynamics. Using panel data from seven industrial-regional governments, this study addresses that gap. The findings indicate that economic growth, PAD, and DAU exert a positive influence on capital expenditure. The process of industrial expansion has been demonstrated to increase fiscal space and investment incentives. Furthermore, stronger local revenue mobilisation has been shown to enhance fiscal autonomy and development responsiveness. Concurrently, intergovernmental transfers continue to play a pivotal role in fostering regional investment, including in economically vibrant regions. This study makes a contribution to the existing literature on fiscal decentralisation by highlighting a dual fiscal mechanism in industrial regions. The results of the study highlight the necessity of achieving a balance between local revenue strengthening and transfer design in order to ensure the sustainability of productive public investment.</p>

Bangladesh has ranked among the most vulnerable in the world where the survival of millions of people and possibility of a sustainable development is intrinsically linked to the health of its environment. Focusing on Union Parishad as the sole unit of rural administration, the research attempts to analyze the role and power of the said institution, the systemic pressures limiting its performance using the mixed method approach. The findings suggest a profound conundrum. While there is near unanimity among the rural communities that environmental degradation, taking the forms of floods, river erosion and salinity, is a very threatening hazard, the fact is that the study also shows deep disillusionment with those institutions that are supposed to protect them. The study identifies a near-total lack of community engagement (81.5%) driven by chronic funding shortages, corruption, and political interference. To resolve this, a paradigm shift toward fiscal decentralization, through a dedicated 'Climate Resilience Fund' and mandatory 'Ward Shavas,' is required to restore public trust and localize the SDGs. The paper moves towards a conclusion that this is not because of lack of interest of the citizens, but a broken system of governance.

Retraction Note: Eco-Innovation and Fiscal Decentralisation: Pathways to Reducing CO2 Emissions in BRICS Economies

Financial accountability is a key pillar of good governance, particularly under fiscal decentralization. Many Indonesian provinces still face challenges such as limited transparency, high dependence on central government transfers, and inadequate technological capacity. This study investigates the determinants of provincial financial accountability by examining the effects of local government size, fiscal dependence, with E- government as a mediating variable an underexplored aspect in the Indonesian context. Using unbalanced panel dnnnata of 155 observations from 31 provinces over 2019–2023, panel regression analysis was conducted in EViews, supported by t-tests, sobel Test, F-tests, and R²/Adjusted R². The findings reveal that larger local governments negatively affect financial accountability due to bureaucratic complexity, weaker internal controls, and reduced efficiency. Likewise, higher fiscal dependence on central transfers undermines accountability by limiting local fiscal autonomy and redirecting focus from local communities to central authorities. Crucially, e-government significantly mediates these negative effects by enhancing transparency, efficiency, and public participation through process digitalization, stronger control mechanisms, and real-time monitoring. Overall, the study highlights that while structural challenges constrain financial accountability, effective e-government adoption acts as a corrective mechanism, reinforcing transparency, governance efficiency, and public trust. The results offer important policy implications for advancing digital reforms in local government financial management.

ABSTRACT This study investigates the impact of the urban heat island effect (UHI) and urban forest cover on sovereign bond yields for 68 countries, using novel datasets on UHI, forest cover, and fiscal decentralisation. UHI poses significant economic risks to cities. While urban forest cover is recognised as an effective UHI mitigation strategy, its non-revenue-generating nature presents financing challenges. As a novel contribution, I find a positive and significant association between UHI and sovereign bond yields. Urban forest cover reduces the effect of UHI on sovereign bond yields. I find that fiscal decentralisation enhances the effectiveness of urban forest cover as an adaptation strategy to UHI. These findings offer policymakers a crucial avenue for the monetisation of nature-based, non-revenue generating, adaptation projects.

Fiscal decentralization has become a central policy in many developing countries aimed at improving local government autonomy and enhancing public service delivery. One key indicator of fiscal autonomy is the capacity of local governments to generate Local Own-Source Revenue (Pendapatan Asli Daerah/PAD). However, many local governments in Indonesia still depend heavily on fiscal transfers from the central government. This study examines the role of digital governance in optimizing local tax administration and increasing PAD in Kampar Regency, Riau Province. The research employs a qualitative descriptive approach supported by secondary fiscal data analysis. The findings indicate that digital tax administration contributes to improving transparency, administrative efficiency, and taxpayer compliance. Digital systems allow local governments to monitor tax transactions more effectively while reducing revenue leakage. However, challenges remain in terms of technological infrastructure, human resource capacity, and digital literacy among taxpayers. Strengthening digital governance in local taxation is therefore essential for improving fiscal sustainability and enhancing regional financial independence.

ABSTRACT The widespread adoption of industrial robots has significantly affected the structure of the labour market. This study examines 272 prefecture-level cities in China from 2010 to 2022, develops a theoretical model to explain how robot adoption affects labour misallocation, and empirically tests this relationship using ordinary least squares (OLS) and related models. The findings are as follows: (1) Industrial robot adoption significantly reduces labour misallocation: a 1% increase in robot density is associated with a 1.146% decline in misallocation. This effect is more pronounced in regions with higher levels of fiscal decentralization and excessive labour misallocation. This conclusion remains robust after multiple tests, including tests addressing endogeneity. (2) The integration of manufacturing and services serves as a key transmission channel. After controlling for this integration, the coefficient on robot adoption remains negative, while each unit increase in integration reduces misallocation by 3.713%. (3) Evidence on labour mobility patterns indicates that technological displacement from industrial robots in routine; task-based occupations shifts workers from the secondary sector towards the primary and tertiary sectors, particularly into life-related services.

Regional governments have more power to oversee public finances and promote regional economic growth because to fiscal decentralization. The purpose of this study is to investigate how regional financial performance ratios affect economic growth in East Java Province's Bakorwil II region between 2015 and 2024. Using panel data from regional financial reports and the Central Bureau of Statistics, the study takes a quantitative approach and covers seven regencies and one municipality. EViews was used to do panel data regression analysis, and the Chow, Hausman, and Lagrange Multiplier tests were used to pick the model. The findings suggest that the activity ratio has a positive and substantial impact on economic growth, the effectiveness ratio has a negative and significant association, and the financial independence ratio has a positive but minor influence. These results emphasize the significance of public spending focused on development in fostering regional economic expansion.

This article examines the dynamics of the village governance system in Indonesia within the context of decentralization following the enactment of Law Number 6 of 2014 on Villages. Although numerous studies have discussed village autonomy, fiscal decentralization, and Village Fund management, existing literature tends to focus on fragmented aspects such as financial accountability or leadership, without providing a comprehensive synthesis of institutional structure, authority distribution, participatory governance, and implementation challenges within a unified analytical framework. Therefore, this literature review is necessary to bridge this gap by offering an integrative analysis of how regulatory frameworks, institutional capacity, and socio-political dynamics interact in shaping village governance outcomes. Utilizing a qualitative literature study approach, this article analyzes legal documents, academic publications, and empirical research findings related to village governance. The findings indicate that while villages are normatively granted broad authority and increased fiscal resources, implementation remains constrained by weak administrative capacity, limited community participation, and persistent elite dominance. However, innovative practices such as administrative digitalization and transparency initiatives demonstrate significant potential when supported by strong leadership and institutional reform. This study concludes that strengthening village governance requires a holistic strategy that integrates regulatory refinement, differentiated institutional capacity development, participatory oversight mechanisms, and sustainable community empowerment..

Digital intelligence and financial support

Addressing socioeconomic challenges related to fiscal decentralisation and rural development highlights the growing importance of strengthening the own-revenue capacity of rural local governments for improving financial sustainability and service delivery. Despite extensive research on fiscal decentralisation, a significant gap remains in understanding how the growth of own revenues of rural local governments influences their financial position and expenditure patterns in addressing socioeconomic challenges. The aim of this study is to examine the impact of own revenue growth on the financial performance and expenditure behaviour of rural local governments (Panchayats) in India. The empirical analysis is based on secondary statistical data for the period 2017–2024, covering India, including indicators of own revenue, total revenue, tax and non-tax components, and expenditure, obtained from the Reserve Bank of India (RBI), the Ministry of Panchayati Raj, and the Devolution Index Study Report (2024). The results indicate that own revenue constitutes only about 6–8% of total Panchayat revenue and expenditure, demonstrating its limited contribution to overall financial sustainability. Furthermore, own revenue collection declined from Rs. 5,378.74 crore in 2017–18 to Rs. 4,812.46 crore in 2021–22, reducing its share in total revenue from 8% to 6%, which reflects structural weaknesses in local revenue mobilisation. At the same time, average own revenue per Village Panchayat (Gram Panchayat) remained low, with tax revenue around Rs. 21,000 and non-tax revenue about Rs. 73,000 in 2022–23, indicating insufficient fiscal capacity to support development expenditure. The findings confirm that increasing own revenue has only a marginal effect on expenditure behaviour, as local governments remain highly dependent on intergovernmental transfers, which limits their ability to address socioeconomic challenges effectively. The study contributes to addressing socioeconomic challenges by providing evidence-based insights for strengthening fiscal decentralisation, improving local revenue mobilisation mechanisms, and supporting future research on enhancing the financial autonomy and development capacity of rural local governments.

The article explores the conceptual foundations of fiscal decentralization resilience in the context of the war and post-war transformation of Ukraine's economy. The author's approach to understanding the fiscal resilience of local governments as the ability of local budget systems to adapt to asymmetric shocks, maintain functional capacity, and accelerate the recovery of socio-economic functions in conditions of instability is substantiated. Digital tools of fiscal decentralization (ProZorro, E-data, Diia,etc.) are systematized, and their impact on increasing the stress resistance of local budgets is assessed. Based on the author's methodology, a composite resilience index of fiscal decentralization is built, showing positive dynamics in 2023 compared to 2022. Recommendations for integrating digital platforms into budget mechanisms are formulated.