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June 28, 2026Cogent Social SciencesOpen Access

Governance capacity and subnational fiscal performance under decentralization: evidence from Indonesia

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Authors

SWSetyo Tri WahyudiUniversity of BrawijayaAFAl Muizzuddin FazaallohUniversity of BrawijayaKSKartika SariGunadarma University

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Implication

Examines governance capacity's impact on fiscal performance in Indonesia, suggesting critical insights for policy enhancement.

Key Points

  • This research aims to analyze the relationship between governance capacity and fiscal performance within Indonesia's decentralized local governance.
  • Utilized panel data from seven local governments in the Gerbangkertosusilo metropolitan area from 2015 to 2024.
  • Developed a Composite Fiscal Performance Index (CFPI) measuring various fiscal performance metrics.
  • Analyzed variations in fiscal outcomes based on governance capacity among different jurisdictions.
  • Higher CFPI scores correlate with stronger governance capacity, particularly in Surabaya City and Sidoarjo Regency.
  • Lower-capacity jurisdictions show weaker fiscal performance, slow growth in own-source revenues, and increased reliance on intergovernmental transfers.
  • High-performing jurisdictions maintain favorable fiscal trajectories, indicating sustainability in revenue generation.

Cite This Study

Wahyudi et al. (2026) studied this question.

synapsesocial.com/papers/6a40bab961bb0a67205c6770https://doi.org/10.1080/23311886.2026.2692764
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