Abdul Hakim Fakultas Ekonomi.
Universitas Islam Indonesia e-mail: abdul.
hakim@staff.
Jaka Sriyana Fakultas Ekonomi.
Universitas Islam Indonesia e-mail: jakasriyana@fe.
Abstract Assigning autonomy to regency governments in Indonesia has failed to increase regencyAos economies.
While it increases regency government role in planning and initiating policies, its impact on economic development has been insignificant.
This stems from the lack of institutionAos capacity in organizing the bulk funds transfer from the central government which leads to inefficiency in resource allocation.
This paper maps these regencies based on their fiscal dependency.
This paper also applies Data Envelopment Analysis to identify the efficient and non efficient regencies in such a way that the non efficient regencies might use the efficient ones as the benchmark to increase their Keywords: Autonomy, regency government, efficiency JEL classification numbers: H21.
H53.
H71.
H72
INTRODUCTIONO)
One of the most important aspects in Indonesian reformation started in 1997 has been the implementation of regency autonomy.
The government, based on Act No.
32/2004
on Local Government and Act No.
33/2004
on Central and Local Fiscal Balance has brought about a significant change in the relationship between central and regency The implementation of these acts is expected to strengthen the reformation process in regency government and provides more freedom in terms of politics, organization of regencies funding and the use of regency resources for the benefit of local people, and builds a new environment in regency development.
To support the scheme, the central government transfer more funds and gave The authors acknowledge the grant from Direktorat Jenderal Pendidikan Tinggi.
Republik Indonesia, under the scheme of Hibah Kompetitif Penelitian sesuai Prioritas Nasional, 2009-2010.
some sources of funds that can be maintained by the regency government, including the right to impose tax and retribution.
It also gave them the right to borrow funds from some sources of funding.
The role of local governments can be viewed from their budget.
The budget can be viewed as an instrument to trigger regencies economic growth.
The size of government spending influences on economic growth has been studied by Butkiewicz and Yanikkaya .
They suggest that the government should limit their consumption spending and increase their investment spending to speed up its economic growth.
Decentralization is a policy by which regency governments have some responsibilities to rule their territory.
Regency governments are assumed to have more information about their own needs and conditions, compare to the central government.
It is also expected that they can spend their budget more appropriately to meet the need of their people.
The autonomy has motivated regency governments to optimize their fiscal capacity, in which the main goal is to fund their development.
It some times occurred that such efforts negatively impact the other As an example, regency governments have added their income sources that led to the deterioration in the wealth of farmers and other small business units, the decrease in investment, and the degradation in environment.
In addition, the regulation by regency governments to impose tax for inter-regency has reduced the economic activities between the two.
This has reduced the benefit resulted from free trade across As the consequences of regency autonomy, the central government has transferred funds to regency governments under the scheme of General Purpose Funds (GPF).
Special Purpose Funds (SPF), and De-concentration Funds (DF).
However, these transfers failed to increase regency performance.
This can be viewed as the incapability of regency governments, both institutionally and non-institutionally, to manage the funds.
Based on the aforementioned description, the paper aims at finding a strategy to enhance the efficiency of regencyAos public spending based on their fiscal capacities.
It will be done by finding relative efficiency in all regencies.
Using the wellknown Data Envelopment Analysis (DEA), it will be shown regencies which are not In addition, the results will provide the regencies which should be referred to as the benchmarks for the inefficient regencies in order to increase their efficiency.
The paper aims at constructing maps on regencyAos fiscal capacity and regencyAos relative efficiency in public spending.
Pareto and Koopmans .
, in Pertiwi .
, define an organization as efficient if it can produce the highest output with a certain level of input, or produce a certain quantity of output using the least The concept is extended by Farrell .
and Koop and Diewert .
, which analyze the response between production plan with input and output values in the market.
There is a possibility that by using less input we can produce the same amount of output, but the price of the output is more expensive compare to the competitorAos price.
This might be influenced by the increase in the price of inputs (Rustam.
It can also be measured by the ratio of value added to the output.
The higher the ratio, the higher the efficiency is.
There are two types of efficiency in the literature.
The first one is technical efficiency which measures the rate of the use of economic infrastructure to produce a certain amount of output.
The second one is spending efficiency which measures the optimal combination of inputs used in the process of production at the relative price.
Efficiency of regencies government spending can be defined as a condition in which there is no other resources allocation that can increase peopleAos wealth.
In other words, any dollar spent by the government provides the maximum wealth (Kurnia.
With respect to regencies government spending efficiency can be divided in three types, namely production, allocation, and fiscal efficiencies.
Production efficiency concerns with the budget spent to provide a certain amount of output.
Regarding the fiscal decentralisation, production efficiency can be obtained if resources allocated to various spending resulted in the maximum output.
The measure and relative comperation of this production efficiency is done by considering variables such as education and health condition.
Allocation efficiency concerns with the fit of spending and peopleAos preferences.
However, this type of efficiency is not easy to measure, as it is not easy to measure the marginal preferences of the people.
Decentralization.
Fiscal CapabilityA (Hakim and Sriyan.
Fiscal allocation concerns with government income resources to fund their In general, the income comes from two main sources, namely regency initial income (RII) and transfer from the central government.
The issues concerning the connection between regency government income sources on fiscal efficiency are .
the appropriateness of regencies tax and retribution to fund their funds, .
the role of central government transferAos fund as the additional sources to adjust external shocks, and .
RBIS ideally does not lead to negative impact on regional macroeconomic stability.
Some papers have investigated the efficiency using various methods, in which some have already discussed the importance of DEA.
Worthington and Dollery .
demonstrate that local government in Australia exhibits a large degree of diversity both within and between states and They show that inexorable demographic, employment and infrastructural trends are underway which will ensure that the diversity will not only continue, but also increase.
Although the imposition of uniform national standards may seem attractive at first sight, the actual implementation of these standards seems to be neither feasible nor desirable.
Woodbury et al.
seek to review municipal efficiency measurement in Australia.
They summarise progress made in efficiency measurement on a state by state basis, discuss Data Envelopment Analysis, and consider service quality measures.
They argue there is an urgent need to develop methodologies for assessing overall efficiencies, which include service quality measures.
Woodbury et al.
review municipal efficiency measurement in Australia and argue that the present reliance on partial measures of performance is inadequate and should be heavily augmented by data envelopment analysis (DEA).
They summarize progress made in efficiency measurement on a state-by- state basis and then examine performance measurement in wa- ter and wastewater as a more detailed case As the results, they argue that DEA provides the best means of providing public policymakers with the necessary information on municipal performance.
Constantin et al.
apply a Cobb-Douglas.
Translog Stochastic Production Function and Data Envelopment Analysis to estimate inefficiencies over time as well as respective Total Factor Productivity sources for main Brazilian grain crops throughout the most recent data They find that, although positive changes exist in Total Factor Productivity for the sample analyzed, a decline in the use of technology has been evidenced for all grain crops in which it is observed a historical downfall in the use of inputs in Brazilian agriculture.
Van der Westhuizen and Dollery .
investigate the efficiency of service provision in South Africa.
They evaluate the productive efficiency using Data Envelopment Analysis techniques applied to crosectional data.
They find considerable variation exists in the average efficiency scores between some provinces.
This suggests that the financial and technical support for local government provided by the National Treasury to local government, which includes policy advice and the placement of international advisors in municipalities, should be more carefully targeted between the different provinces, and biased towards the worst-performing provinces.
Kalb .
investigates the determinants of local governments' technical efficiency in road maintenance for a panel of German counties using a broad variety of estimation approaches, namely nonparametric (DEA) and parametric .
tochastic frontier analysi.
He shows that disposable income of the counties' citizens, intergovernmental grants, and the payments to the countries negatively affect He also finds weak evidence that efficiency decreases with an increasing share of seats of left-wing parties in the county council.
the hypothesis that effi- ciency decreases with the degree of political concentration in the county council could not be confirmed.
More on the measures of efficiency can be found in Holzer .
METHODS
To maps the district dependency in terms of income and spending structures, the paper uses the following ratios:
FI =
RII
FD =
GPF
where FI is fiscal independency.
FD is fiscal dependency.
RII is regency initial income.
GPF is general purpose funds, and TS is total spending.
FI represents the source of funds available in the regency.
is used as the indicator for regencyAos income, which has an important role in the process of development.
FD represents the proportion of funds needed to support the regencyAos economic development.
To find the relative efficiency in each regency, the paper applies DEA.
DEA is commonly used to evaluate the efficiency of a number of producers.
This analysis enables us to find the efficient regency which provides benchmark to the inefficient ones.
It is an extreme point method and compares each producer with only the "best" producers.
producer is usually referred to as a decision making unit or DMU.
The fundamental assumption in this analysis is that if a given producer.
A, is capable of producing Y(A) units of output with X(A) inputs, other producers should also capable of doing the same process if they were to operate efficiently.
Similarly, if producer B is capable of producing Y(B) units of output with X(B) inputs, other producers should also capable of doing the same process.
Producers A.
B, and others can then be com- bined to form a composite producer with composite inputs and outputs.
Since these composite producers do not necessarily exist, it is sometimes called a virtual producer.
The heart of the analysis lies in finding the best virtual producer for each real If the virtual producer is better than the original producer by either making more output with the same input or making the same output with less input, then the original producer is inefficient.
Some of the subtleties of DEA are introduced in the various ways that producers A and B can be scaled up or down and combined.
The procedure of finding the best virtual producer can be formulated as a linear program.
Analyzing the efficiency of n producers is then a set of n linear programming problems.
The following formulation is one of the standard forms for DEA.
The formulation of DEA InputOriented Primal Function can be written as:
min o subject to Y Ou Y0 oX 0 Oe X Ou 0 ofree.
Ou 0 , .
where is the producer's efficiency.
X and Y describe the virtual inputs and outputs, respectively, and is a vector describing the percentages of other producers used to construct the virtual producer.
It should be emphasized that a linear programming of this form must be solved for each DMU.
The first constraint forces the virtual DMU to produce at least as many outputs as the DMU under consideration.
The second constraint finds out how much less input the virtual DMU would be needed.
Hence, it is called inputoriented.
The factor used to scale out the inputs is theta and this value is the efficiency of the DMU.
DEA has some managerial importance as follows.
First.
DEA provides efficiency index for each DMU, relative to the other DMU in the sample.
This index can be Decentralization.
Fiscal CapabilityA (Hakim and Sriyan.
used to recognize the DMUs that need consideration the most and set a plan to enhance their efficiency.
Second, if a DMU is less efficient .
fficiency<100%).
DEA provides some DMUs efficiency of 100% and some multiplier index that can be used to enhance the efficiency.
The information enables the analyst to create hypothetical DMUs which use less input and produce output at least the same as the inefficient DMU.
Such hypothetical DMUs provide information to enhance an inefficient DMU by recognizing the overuse inputs in order to produce a certain amount of output.
It enables to adjust the amount of input and output to attain the optimal efficient of a DMU.
Third.
DEA provides a crossefficient matrix.
It can help a manager to recognize the efficient DMU using different combination of input and output than other efficient DMU.
This phenomenon is called unique DMU or maverick.
RESULTS DISCUSSION
Mapping the Fiscal Dependency and Fiscal Independency The data of RII.
TS.
GPF.
FI and FD for all regencies in the five provinces are presented in Table 1 to 4.
The regencies are sorted using the criteria of the lowest-to-highest FD.
The tables list the regencies with FD which are very low (FD<40%), low .
%<FD<50%), high .
%<FD<75%), and very high (FD>75%), respectively.
The analysis on all observations suggests that the regencies have the ratio of fiscal dependencies of 54.
with the variance of 10.
This means that about 54% of the expenditure are funded by the funds from the central government.
Table 1: Cities and Regencieswith V ery Low Fiscal Dependency Regency RII
GPF
Badung 362,123.
639,925.
165,685.
City of Surabaya 538,369.
94 1,386,340.
359,520.
City of Kediri 52,905.
368,825.
131,453.
City of Semarang 224,822.
927,224.
332,098.
City of Denpasar 126,148.
512,994.
187,085.
Sidoarjo 178,026.
972,719.
365,661.
Notes: .
FI is Fiscal Independency, .
FD is Fiscal Dependency.
FI (%)
FD (%)
FI (%)
FD (%)
Source: Data estimation.
Table 2: Cities and Regencies with Low Fiscal Dependency Regency RII
GPF
City of Yogyakarta 96,551.
498,044.
201,231.
Gresik 101,602.
624,696.
261,283.
City of Probolinggo 28,705.
276,351.
117,368.
City of Malang 62,953.
511,284.
221,130.
City of Mojokerto 20,588.
261,729.
117,591.
Karangasem 28,839.
392,602.
180,482.
City of Surakarta 78,585.
470,560.
218,082.
Tabanan 43,925.
457,490.
212,991.
Klungkung 18,983.
287,674.
134,371.
Bangli 9,317.
278,899.
130,689.
Jembrana 12,771.
329,935.
156,827.
Cilacap 78,895.
825,875.
392,866.
Kudus 51,311.
476,145.
227,890.
Buleleng 31,321.
518,101.
258,283.
City of Blitar 27,453.
242,950.
121,252.
Notes: .
FI is Fiscal Independency, .
FD is Fiscal Dependency.
Source: Data estimation.
Table 3: Cities and Regencies with High Fiscal Dependency Regency RII
GPF
Kulon Progo 35,203.
458,909.
231,438.
Jepara 54,110.
539,720.
276,946.
Bangkalan 28,727.
500,510.
258,229.
Sragen 52,019.
592,406.
306,460.
Tuban 78,358.
571,662.
295,978.
City of Magelang 36,954.
242,473.
125,606.
Magelang 36,954.
242,473.
125,606.
Lamongan 42,441.
622,917.
324,917.
Sleman 90,422.
609,762.
318,139.
City of Batu 11,050.
199,815.
104,489.
Rembang 39,998.
411,063.
215,234.
Magetan 31,396.
499,067.
261,901.
Semarang 66,625.
531,147.
279,060.
Bojonegoro 44,811.
639,288.
336,530.
Tulungagung 36,262.
607,549.
320,158.
Blitar 35,767.
630,799.
335,944.
Gunung Kidul 29,801.
503,624.
268,325.
Jember 68,624.
937,548.
500,843.
Nganjuk 52,045.
593,878.
318,323.
Ponorogo 35,639.
532,878.
288,950.
Lumajang 45,999.
521,396.
283,848.
Pamekasan 34,421.
447,417.
244,186.
Wonogiri 47,864.
604,211.
330,104.
Banjarnegara 43,886.
506,621.
276,999.
City of Salatiga 32,444.
225,666.
124,117.
Batang 31,030.
404,498.
222,826.
Probolinggo 32,188.
506,123.
279,153.
Klaten 33,920.
729,415.
404,869.
Pacitan 16,806.
400,539.
222,922.
Temanggung 31,187.
418,443.
233,303.
Sukoharjo 44,008.
486,775.
272,531.
Banyumas 84,391.
719,985.
404,114.
Bantul 44,048.
545,132.
308,106.
Malang 69,651.
908,075.
513,563.
Pekalongan 30,803.
446,989.
253,342.
Pemalang 58,450.
582,362.
330,899.
Tegal 53,852.
605,018.
344,868.
Mojokerto 44,633.
474,040.
270,558.
Demak 33,811.
491,235.
280,831.
Situbondo 23,029.
387,323.
221,834.
Karanganyar 46,052.
493,849.
284,448.
Kediri 53,470.
661,107.
380,907.
Pasuruan 64,662.
654,679.
378,252.
Pati 66,197.
576,233.
337,244.
Banyuwangi 53,725.
681,285.
398,823.
Kebumen 92,533.
618,431.
362,789.
Ngawi 19,956.
483,383.
284,397.
Purbalingga 47,694.
478,543.
282,267.
Trenggalek 23,420.
434,753.
256,498.
Boyolali 59,307.
530,077.
313,078.
Grobogan 41,926.
582,165.
344,330.
City of Pasuruan 20,757.
211,195.
125,070.
Jombang 66,303.
548,612.
328,521.
Notes: .
FI is Fiscal Independency, .
FD is Fiscal Dependency.
Source: Data estimation.
FI (%)
FD (%)
Decentralization.
Fiscal CapabilityA (Hakim and Sriyan.
Table 4: Cities and Regencieswith very High Fiscal Dependency Regency RII
GPF
FI (%)
Sampang 19,617.
383,665.
74 231,753.
Purworejo 32,813.
463,907.
48 281,270.
City of Tegal 63,725.
291,812.
16 178,273.
Bondowoso 23,570.
410,793.
56 251,718.
Gianyar 55,006.
316,720.
52 198,172.
Brebes 47,995.
633,700.
30 402,905.
Sumenep 38,991.
538,826.
11 363,407.
City of Madiun 19,362.
301,984.
22 207,320.
City of Pekalongan 15,192.
179,445.
70 132,335.
Blora 29,432.
370,991.
82 285,250.
Kendal 38,403.
367,294.
15 286,808.
Madiun 22,096.
244,945.
39 246,292.
Notes: .
FI is Fiscal Independency, .
FD is Fiscal Dependency.
Source: Data estimation.
The tables also imply that cities have lower FD than regencies, and that cities or regencies which are industry centres, either tourism or non-tourism industries, have lower fiscal dependency.
Analysis on Relative Efficiency As mentioned, the paper applies DEA to find relative efficiency in each regency.
The input variables are GPF (General Pur- Regencies GPF Kulon Progo Gunung Kidul City of Yogyakarta 316832000 Sidoarjo City of Blitar Nganjuk City of Semarang 504046870 Rembang Demak Klaten Badung City of Denpasar Karang Asem Jembrana Bangli Source: Data estimation.
LOS
pose Fund.
LOS (Lag of Operational Spendin.
, and LPS (Lag of Public Spendin.
The output variables are TAX .
RET .
, and RII (Regency Initial Incom.
The data of GPS.
LOS.
LPS.
TAX.
RET, and RII for chosen 15 regencies from the five provinces are presented in Table 5.
The table shows chosen regencies represent those with the highest to the smallest fiscal Table 5: Input and Output Variables for DEA Analysis (Rp .
Input
FD (%)
LPS
TAX
Output
RET
RII
2780950 17410319 28891547
2919140 16866338 25485903
334853679 47899850 24202491 91626503
589511980 74395000 69174100 156013933
2666000 10019834 19052019
6247230 28711661 39580803
430439506 114162834 61720445 199397838
7400445 17823757 31426067
6738000 10741993 22986858
422511545 12955000 11014894 36271788
527741005 239810358 11196440 270656013
146992479 69770000 31729805 110430328
215950480 14050025 6738700 27741725
3820000 2520200 11202090
The paper uses the DEAOS (Data Envelopment Analysis Online Softwar.
package, which is free software based on online usage.
The software can be access from http://w.
com/projects.
The result of the analysis is presented in Table 6.
The table suggests that there are four regencies with 100% efficiency, namely Sidoarjo.
City of Semarang.
Badung, and City of Denpasar.
This means that these regencies can be used as references for inefficient regencies.
Table 6: DEA Result.
Relative Efficiency and Relative Weak Efficiency Regencies Kulon Progo Gunung Kidul City of Yogyakarta Sidoarjo City of Blitar Nganjuk City of Semarang Rembang Demak Klaten Badung City of Denpasar Karang Asem Jembrana Bangli Source: Data estimation.
Efficiency 100 % * 100 % * Graph Table 7: DEA Result: Regencies and Their References for Relative Efficiency Regencies Kulon progo Gunung kidul City of Yogyakarta Sidoarjo City of blitar Nganjuk City of semarang Rembang Demak Klaten Badung City of denpasar Karang asem Jembrana Bangli Source: Data estimation.
Peer Group Sidoarjo City of Denpasar Sidoarjo,City of Semarang,Badung Sidoarjo City of Semarang,City of Denpasar Sidoarjo City of Semarang,City of Denpasar City of Denpasar Sidoarjo,City of Semarang Sidoarjo,City of Semarang,Badung Badung City of Denpasar Sidoarjo,Badung City of Denpasar Sidoarjo,City of Semarang Frequencies Decentralization.
Fiscal CapabilityA (Hakim and Sriyan.
Table 3 shows that Sidoarjo is referred by seven other regencies.
By referring to Sidoarjo, these these regencies are expected to be efficient.
These regencies are Kulon Progo.
City of Yogyakarta.
Nganjuk.
Demak.
Klaten.
Karang Asem, and Bangli.
City of Semarang is referred by five other regencies, namely City of Yogyakarta.
City of Blitar.
Demak.
Klaten, and Bangli.
City of Denpasar is referred by five other regencies, namely Gunung Kidul.
City of Blitar.
City of Semarang.
Rembang, and Jembrana.
Badung is referred by three other regencies, namely City of Yogyakarta.
Klaten, and Karang Asem.
To achieve its efficiency, a regency might refer to more than one regency.
DEA
provides the changes in input and output which enable a regency to increase their efficiencies, provided in the following Table 8.
Table 8: DEA Result: Adjustment in Input and/or Output for Achieving Relative Efficiency Regencies GPF
LOS
Kulon
Progo
344035000 to 41001418 to Gunung
Kidul
432868000 to LPS
RET
RII
17410319 to 28891547 to 2919140 to 16866338 to 25485903 to 334853679 to 47899850 to 24202491 to 91626503 to 245527981 to 2780950 to 242261211 to 109883221 to City of 316832000 to 64390925 to Yogyakarta 195931125.
TAX
Sidoarjo 524136000 to 120484019 to 589511980 to 74395000 to 69174100 to 156013933 to City of Blitar 170379000 to 45287861 to 134254894 to 2666000 to 10019834 to 19052019 to Nganjuk 492051000 to 63010071 to 354952985 to 6247230 to 28711661 to 39580803 to 430439506 to 114162834 to 61720445 to 199397838 to City of 504046870 to Semarang 504046870 135276968 to Rembang 342777220 to 182474632 to 95946948 to 7400445 to 17823757 to 31426067 to Demak 408453000 to 75117297 to 285523254 to 6738000 to 10741993 to 22986858 to Klaten 635488000 to 121254834 to 422511545 to 12955000 to 11014894 to 36271788 to Badung 167471000 to 84568320 to 527741005 to 239810358 to 11196440 to 270656013 to City of Denpasar 18850000 to 221135699 to 146992479 to 69770000 to 31729805 to 110430328 to Karang Asem 286423000 to 39676568 to 215950480 to 14050025 to 6738700 to 27741725 to Jembrana 255025000 to 162015025 to 83434539 to 3820000 to 2520200 to 11202090 to Bangli 213228000 to 40043961 to 156876527 to 1760560 to 4380710 to 7577044 to Source: Data estimation.
Table 9: Regencies Rank based on Fiscal Independency DIY RII
GPF
FI (%) FD (%)
1 Badung 362,123.
639,925.
165,685.
2 City of denpasar 126,148.
512,994.
187,085.
3 City of semarang 224,822.
927,224.
332,098.
4 City of jogja 96,551.
498,044.
201,231.
5 Sidoarjo 178,026.
972,719.
365,661.
6 City of blitar 27,453.
242,950.
121,252.
7 Rembang 39,998.
411,063.
215,234.
8 Nganjuk 52,045.
593,878.
318,323.
9 Kulon progo 35,203.
458,909.
231,438.
10 Karangasem 28,839.
392,602.
180,482.
11 Demak 33,811.
491,235.
280,831.
12 Gunung kidul 29,801.
503,624.
268,325.
13 Klaten 33,920.
729,415.
404,869.
14 Jembrana 12,771.
329,935.
156,827.
15 Bangli 9,317.
278,899.
130,689.
Note: Entries in bold are regencies with high fiscal independencies.
Source: Data estimation.
It is interesting to investigate the characteristics of the four reference regencies, namely Sidoarjo.
City of Semarang.
City of Denpasar, and Badung.
One of the most important characteristics is that these regencies have high level of fiscal independencies, which is measured as the ratio of RII to TS.
Table 5 lists the regencies, ranked with their fiscal independency criteria.
It can be concluded that the government transfer does not effectively increase economic performance of the regencies.
This might be caused by the lack of institutional capacity in the regencies.
The other possibility is that the transfer needs time-lag to have a significance impact on the regencyAos economic performance.
Therefore, the future research might consider lag of central government transfer as the input, instead of using current central government transfer.
CONCLUSSION
Assigning more autonomy to regencies in Indonesia during the past nine years did not significantly increase their economy.
A key problem in the application of regency autonomy was the failure in the fiscal policy in most regency, namely the low efficiency of budget allocation and the low of productivity of government budget in regencies, especially in public spending.
Such conditions might have led to the failure in the government spending policy along with the failure in meeting national development targets.
The fundamental problems in all regencies were institution capacity that could not organize the bulk transfer of funds from the central government.
This will eventually lead to resources misallocation of government budget.
This has motivated to analyse the causes of the low efficiency and productivity of government spending in those regencies.
This paper models the efficiency of public spending based on regency fiscal capacity and institutions.
The analysis of DEA conducted in the paper suggested that the referred regencies are those with high fiscal independency level.
This suggested Decentralization.
Fiscal CapabilityA (Hakim and Sriyan.
that the central government transfer did not significantly influence economic performance in most regency, which might be caused by either the lack of regency institu-
REFERENCES