Assessing the Local Government Efficiency: Evidence from Sumatra, Indonesia

  • Roosemarina Anggraini Rambe Department of Economic Development, University of Bengkulu, Indonesia
  • Kodrat Wibowo Indonesia Competition Commission, Indonesia
  • Ratu Eva Febriani Department of Economic Development, University of Bengkulu, Indonesia
  • Septriani Septriani Department of Economic Development, University of Bengkulu, Indonesia
Keywords: local government spending, relative efficiency, regional split, general-purpose grants, DEA

Abstract

The purposes of this research were to assess the relative efficiency of local government spending in Sumatra, Indonesia and to analyze the determinants of this efficiency. Data Envelopment Analysis (DEA) and multiple regression were employed for a data set of the spending of 154 local governments in 2016. Three inputs were used to measure the relative efficiency: (i) direct personnel spending per capita, (ii) spending on goods and services per capita, and (iii) capital spending per capita. The two outputs applied were life expectancy and years of schooling. The results show that, of the 154 local governments, 16, across eight provinces in Sumatra, were relatively efficient. Furthermore, population density and per capita gross regional domestic product significantly and positively affected local government efficiency. However, the general purposes grant per capita did not affect local government efficiency. Regional expansion did not cause the new split-region governments to be more relatively efficient than the governments of their parent regions.

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Published
2020-09-12
How to Cite
Rambe, R. A., Wibowo, K., Febriani, R. E., & Septriani, S. (2020). Assessing the Local Government Efficiency: Evidence from Sumatra, Indonesia. pplied conomics ournal, 27(2), 20-44. etrieved from https://so01.tci-thaijo.org/index.php/AEJ/article/view/240043
Section
Research Articles