The effect of regional income inequality and social diversity on the provision of local public goods in Indonesia

2019 ◽  
Vol 47 (1) ◽  
pp. 111-126
Author(s):  
Matondang Elsa Siburian
Keyword(s):  
Public Goods ◽  
Ethnic Diversity ◽  
Equal Access ◽  
Local Public Goods ◽  
Policy Recommendation ◽  
Social Diversity ◽  
Public Goods Provision ◽  
Regional Income ◽  
Content Type ◽  
Regional Income Inequality

Purpose The purpose of this paper is to quantify the effects of regional income disparity and social diversity on local public goods delivery in Indonesia. Design/methodology/approach Using Indonesian provincial data over the period 2001–2014 and by way of System GMM, this paper circumvents endogeneity and persistence of key variables over time which may bias the estimated impact of the critical variables. Findings The result provides no significant evidence on the influence of regional income inequality on the provision of local public goods. The result reveals that ethnic diversity is associated with the more extensive provision of local public goods. A large difference in preferences toward public goods provision in a fragmented society such as Indonesia forces the local government to deliver a greater mixed of public goods to accommodate various preferences for public goods and ensure that each group has equal access to public goods. Political fragmentation within an ethnically heterogeneous society also encourages local politicians to provide a larger provision of public goods to form an inter-ethnic coalition to gain local political access. Practical implications The significant effect of ethnic diversity on public goods provision implies a set of policy recommendation for Indonesian Government in order to maintain peace within the country. The central government should establish a clear-cut standard of local public goods provision for local governments to ensure that that anyone has equal access to public goods regardless of ethnicity. This will mitigate the possibility of ethnic conflict in an ethnically plural society. Originality/value This paper extends its analysis using both fractionalization and polarization indexes to measure the social diversity in Indonesia to obtain a comprehensive knowledge regarding the influence of ethnic diversity on the public good provision. This paper proposes a set of policy recommendation for Indonesian Government to manage the effect of social diversity on the provision of local public goods. To the author’s knowledge, this has never been done before for Indonesia. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2018-0661

Ethnic Diversity and Ethnic Discrimination: Explaining Local Public Goods Provision

2017 ◽  
Vol 51 (10) ◽  
pp. 1351-1383 ◽  
Author(s):  
Alexander Lee
Keyword(s):  
Public Goods ◽  
Ethnic Diversity ◽  
Service Provision ◽  
Ethnic Discrimination ◽  
Local Public Goods ◽  
Public Goods Provision ◽  
Northern India ◽  
Local Problems ◽  
Using Data

Numerous studies have found that ethnic diversity is negatively associated with the provision of local public goods. However, these accounts neglect both the strong role of central institutions in the provision of many “local” public goods and the frequently positive correlation between diversity and the presence of less politically powerful ethnic groups. These factors suggest that existing diversity findings may be explained in some cases by central governments discriminating against areas inhabited by less powerful groups. This hypothesis is tested using data in village-level public goods provision in Northern India, supplemented by data on service provision in Kenyan villages and American cities. While there is evidence that the presence of socially powerful groups is positively associated with service provision, evidence for the diversity hypothesis is weak. The results suggest that failures of public services in diverse areas may reflect larger inequalities within the political system rather than local problems in cooperation.

Voluntary Cooperation in Local Public Goods Provision: An Experimental Study

2016 ◽  
Author(s):  
Andrej Angelovski ◽  
Daniela Di Cagno ◽  
Werner GGth ◽  
Francesca Marazzi ◽  
Luca Panaccione
Keyword(s):  
Experimental Study ◽  
Public Goods ◽  
Local Public Goods ◽  
Public Goods Provision ◽  
Voluntary Cooperation

Economic versus Cultural Differences: Forms of Ethnic Diversity and Public Goods Provision

2010 ◽  
Vol 104 (4) ◽  
pp. 644-662 ◽  
Author(s):  
KATE BALDWIN ◽  
JOHN D. HUBER
Keyword(s):  
Public Goods ◽  
Cultural Differences ◽  
Ethnic Diversity ◽  
Negative Relationship ◽  
Ethnically Diverse ◽  
Public Goods Provision ◽  
Effective Governance ◽  
Empirical Tests ◽  
Group Inequality ◽  
Cross National

Arguments about how ethnic diversity affects governance typically posit that groups differ from each other in substantively important ways and that these differences make effective governance more difficult. But existing cross-national empirical tests typically use measures of ethnolinguistic fractionalization (ELF) that have no information about substantive differences between groups. This article examines two important ways that groups differ from each other—culturally and economically—and assesses how such differences affect public goods provision. Across 46 countries, the analysis compares existing measures of cultural differences with a new measure that captures economic differences between groups: between-group inequality (BGI). We show that ELF, cultural fractionalization (CF), and BGI measure different things, and that the choice between them has an important impact on our understanding of which countries are most ethnically diverse. Furthermore, empirical tests reveal that BGI has a large, robust, and negative relationship with public goods provision, whereas CF, ELF, and overall inequality do not.

Economic growth with space and fiscal policies with housing and public goods

2011 ◽  
Vol 38 (4) ◽  
pp. 452-482 ◽  
Author(s):  
Wei‐Bin Zhang
Keyword(s):  
Economic Growth ◽  
Public Goods ◽  
Economic Geography ◽  
Growth Theory ◽  
Local Public Goods ◽  
Dynamic Interactions ◽  
Content Type ◽  
Neoclassical Growth Theory ◽  
Neoclassical Growth ◽  
Over Time

PurposeThis study aims to examine dynamic interactions among economic growth, geography and the housing market with public goods financed by the government. A general dynamic equilibrium model of an isolated economy with economic geography, local public goods and capital accumulation is to be constructed. The economy has three sectors, supplying industrial goods, housing, and local public goods. The model synthesizes the main ideas in neoclassical growth theory, the Alonso urban model, and the Muth housing model in an alternative framework to the traditional growth theory.Design/methodology/approachThe model is based on the neoclassical growth theory with an alternative approach to household behavior. The paper shows how to solve the dynamics of the economic system and simulate the model to demonstrate dynamic interactions among economic growth, housing market, residential distribution and public goods over time and space.FindingsThe paper simulates equilibrium and motion of the spatial economy with Cobb‐Douglas production and utility functions. The simulation demonstrates, for example, that, as the tax rate on the land income is increased, the total capital stocks and the stocks employed by the three sectors are increased, the rate of interest falls and the output of the industrial sector and the wage rate are increased, the land devoted to local public goods falls and the land rent and housing rent rise over space, the consumption level of the industrial goods and the total expenditures on the public goods are increased.Practical implicationsThe paper provides some possible implications of the model for complicated consequences of government policy over time and space. In particular, the paper shows that a change in government policy not only has a macroeconomic impact over time, but also affects the economic geography of the national economy.Originality/valueThe paper offers insights into the linkage among growth, national public policies and economic geography.

Public vs. Private Ownership of Firms: Evidence from Rural China

2017 ◽  
Author(s):  
Yingyi Qian
Keyword(s):  
Public Goods ◽  
Rural China ◽  
Local Communities ◽  
Local Public Goods ◽  
Private Enterprises ◽  
Public Goods Provision ◽  
Public Firms ◽  
Rural Income ◽  
Rural Enterprises ◽  
Nonfarm Employment

Why are many of China’s successful rural enterprises publically owned by local communities? Using a set of provincial data, we find that the share of community public firms (Township-Village Enterprises, or TVEs) relative to private enterprises is higher where the central government’s influence is greater, the community government’s power is stronger, and the level of market development is lower. We also find that TVEs help achieve the community government’s goals of increasing government revenue, rural nonfarm employment, and rural income. However, TVEs do not increase rural income given the levels of non-farm employment and/or local public goods provision, indicating possible inefficiency as compared to private enterprises.

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