Decentralisation and Human Development in Indonesia: The Importance of Local Government Capacity in Delivering Development Outputs and Outcomes


  • Siswidiyanto . Universitas Brawijaya, Department of public adminisitration
  • Rindi Ardika Melsalasa Sahputri Universitas Brawijaya, Department of public adminisitration



decentralisation, human development, local government capacity, developing country, Indonesia


The debate about the effect of decentralisation on the improvement of human development still exists, which led scholars to investigate the role of government capacity. This study aims to examine the impact of local government capacity on human development in Indonesia during the decentralisation reform over the period 1996-2020. Multiple regression analysis illustrates the role of local government capacity during decentralization. In this study, several human development indicators has failed to improve during the decentralization process. The failure of human development was strongly related to local government capacity to produce education, health, and economic outputs and outcomes. Our study shows how government can stimulate human development during the process of decentralisation by strengthening local government capacity.


Abimbola, S., Baatiema, L. & Bigdeli, M. (2019) The impacts of decentralization on health system equity, efficiency and resilience: A realist synthesis of the evidence, Health and Policy Planning, 34(8), pp. 605-617,

Arends, H. (2020) The dangers of fiscal decentralization and public service delivery: A review of arguments, Politische Vierteljahresschrift, 61(3), pp. 599-622,

Aulich, C., Halligan, J. & Nutley, S. (2020) Public sector management, In: Aulich, C., Halligan, J. & Nutley, S. (eds.) Australian handbook of public sector management (Sydney, Australia: Routledge), pp. 11-19.

Bardhan, P. & Mookherjee, D. (2006) Decentralization and local governance in developing countries: A comparative perspective (Cambride: MIT press).

Bisson, L. (2020) Decentralisation and inclusive governance in fragile settings, Regional & Federal Studies, 24(5), pp. 571-588, available at: (November 16, 2022).

Boyne, G. A. (1998) Bureaucratic Theory Meets Reality: Public Choice and Service Contracting in U. S. Local Government, Public Administration Review, 58(6), pp. 474-484,

Camões, P. (2020) Types of decentralisation and governance: Evidence from across the world, Journal of Public Affairs, 22(3), pp. 1-12,

Canare, T. (2021) Decentralization and welfare: Theory and an empirical analysis using philippine data, Public Sector Economics, 45(1), pp. 93-123,

Carada, W. B. & Oyamada, E. (2012) Decentralization and inclusive governance: Experiences from the philippines and indonesia, Global Studies, 3, pp. 23-50.

Channa, A. & Faguet, J. P. (2016) Decentralization of health and education in developing countries: A quality-adjusted review of the empirical literature, The World Bank Research Officer, 31(2), pp. 199-241.

Crescenzi, R. & Giua, M. (2020) One or many cohesion policies of the european union? On the differential economic impacts of cohesion policy across member states, Regional Studies, 54(1), pp. 10-20,

Danler, C. & Pfaff, K. (2021) The impact of an unequal distribution of education on inequalities in life expectancy, SSM Popul Health, 16,

Dasic, B., Devic, Z., Denic, N., Zlatkovic, D., Ilic, I. D., Cao, Y., Jermsittiparsert, K. & Le, H. V. (2020) Human development index in a context of human development: Review on the western balkans countries, Brain Behav, 10(9),

Dick-Sagoe, C. (2020) Decentralization for improving the provision of public services in developing countries: A critical review, Cogent Economics & Finance, 8(1),

Fadhil, I. & Sabic-El-Rayess, A. (2021) Providing equity of access to higher education in indonesia: A policy evaluation, Indonesian Journal on Learning and Advanced Education (IJOLAE), 3(1), pp. 57-75,

Faguet, J. P. & Pöschl, C.(2015) 1is decentralization good for development?: Perspectives from academics and policy makers, In: Faguet, J. P. & Pöschl, C. (eds.) Is decentralization good for development?: Perspectives from academics and policy makers (United States of Amerika: Oxford University Press), pp. 1-28.

Fidelx Pius, K. (2004) Decentralisation and democracy in developing countries: An overview, Development in Practice, 14(6), pp. 768-779,

GBG (2018) Indonesia’s tertiary education sector: Aiming higher, available at: (November 16, 2022).

Ghozali, I. & Khoirunurrofik, K. (2020) Fiscal decentralisation and capital expenditure composition of regional government in indonesia, International Journal of Trade and Global Markets, 13(1), pp. 81-88,

Halaskova, M. & Halaskova, R. (2015) Fiscal decentralisation and provision of local public services in selected eu countries, Lex Localis- Journal of Local Self-Government, 13(3), pp. 595-613,

Kaluðerović, J., Mirković, M. & Jocović, M. (2017) The impact of fiscal decentralisation on local economic development in montenegro, Lex Localis- Journal of Local Self-Government, 15(3), pp. 685-703,

Kim, J. I. & Kim, G. (2018) Effects on inequality in life expectancy from a social ecology perspective, BMC Public Health, 18(1), pp. 243,

Korten, D. C. (1984) Strategic organization for people-centered development, Public Administration Review, 44(4), pp. 341-352,

Le Galès, P. (2021) The rise of local politics: A global review, Annual review of Political science, 24, pp. 345-363,

Markusen, A. & Glasmeier, A. (2008) Overhauling and revitalizing federal economic development programs, Economic Development Quarterly, 22(2), pp. 83-91,

Mehmood, R., Sadiq, S. & Khalid, M. (2010) Impact of fiscal decentralisation on human development: A case study of pakistan [with comments], The Pakistan Development Review, 49(4), pp. 513-530, available at: (October 22, 2022).

Miller, G. (2005) The political evolution of pa models, Annual Review of Political Science, 8, pp. 203-225,

Miranda-Lescano, R., Muinelo-Gallo, L. & Roca-Sagalés, O. (2022) Human development and decentralization: The importance of public health expenditure, Annals of Public and Cooperative Economics, 94(1), pp. 191-219,

Nugroho, Y. & Sujarwoto (2021) Institutions, outputs and outcomes two decades of decentralization and state capacity in indonesia, Journal of Southeast Asian Economies, 38(3), pp. 296-319,

Pasichnyi, M., Kaneva, T., Ruban, M. & Nepytaliuk, A. (2019) The impact of fiscal decentralization on economic development, Investment Management and Financial Innovations, 16(3), pp. 29-39,

Permanyer, I. & Smits, J. (2020) Inequality in human development across the globe, Population and Development Review, 46(3), pp. 583-601,

Rondinelli, D. A., Nellis, J. R. & Cheema, G. S. (1983) Decentralization in developing countries, World Bank staff working paper, 581, pp. 13-28.

Sarabia, M., Crecente, F., del Val, M. T. & Giménez, M. (2020) The human development index (HDI) and the corruption perception index (CPI) 2013-2017: Analysis of social conflict and populism in europe, Economic Research-Ekonomska Istraživanja, 33(1), pp. 2943-2955,

Shin, G. & Jhee, B. K. (2021) Better service delivery, more satisfied citizens? The mediating effects of local government management capacity in south korea, Asi and the Pacific Studies, 8(1), pp. 42-67,

Siburian, M. E. (2022) Influence of fiscal decentralisation and ethnic diversity on educational outcomes - Evidence from indonesia, Institutions and Economies, 14(2), pp. 91-116,

Siburian, M. E. (2020) Fiscal decentralization and regional income inequality: Evidence from indonesia, Applied Economics Letters, 27(17), pp. 1383-1386,

Siburian, M. E. (2022) Fiscal decentralization and corruption: A case of indonesia, Applied Economics Letters, pp. 1-4,

Stewart, J. & Russell, A. (2001) Systems theory and policy practice: An exploration, Policy Sciences, 34(1), pp. 79-94.

Sujarwoto, S. (2015) Desentralisasi, tata kelola pemerintahan, dan kemiskinan di negara-negara berkembang, Jurnal Ilmiah Administrasi Publik, 1(1), pp. 14-16,

Tambulasi, R. & Kayuni, H. (2007) Decentralization opening a new window for corruptionan accountability assessment of malawi's four years of democratic local governance, Journal of Asian and African Studies, 42(2), pp. 163-183,

Taner, M. T., Sezen, B. & Mıhcı, H. (2011) An alternative human development index considering unemployment, South East European Journal of Economics and Business, 6(1), pp. 45-60,

Wernerfelt, B. (1984) A resource‐based view of the firm, Strategic Management Journal, 5(2), pp. 171-180.

WHO (2022) Density of physicians (total number per 1000 population, latest available year), available at: (November 1, 2022).