PhD Seminar (Econ)
Date & time
This paper examines the degree of spatial interdependence in fiscal policy and service provision by local governments in Indonesia. The research forms the first attempt to test such interdependence across local areas of a developing country. A spatial Durbin model is estimated for a balanced panel of Indonesian districts for 2009–2013. The findings confirm the existence of positive spatial interdependence in both local government expenditure and access to services. Interdependence is stronger for capital-based spending and education access. The findings point to strategic competition between districts, a process that potentially boosts local government accountability and efficiency in providing service access for citizens.