C. Journal articles published externally

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These are journal articles by World Bank authors published externally.

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    Restructuring Indonesia's Sub-national Public Debt: Reform or Reversion?
    ( 2010) Lewis, Blane ; Woodward, David
    Borrowing can be an efficient way for sub-national governments to acquire capital assets, but it also carries risks of fiscal distress and insolvency for borrowers. To minimise these risks, many governments around the world have developed ex-post insolvency remedies, including, most importantly, debt-restructuring mechanisms. In an effort to resurrect borrowing for local infrastructure development, the Indonesian government has designed and begun to implement debt-restructuring programs for sub-national government and sub-national government-owned water supply company defaulters. These programs constitute a major effort to reform an important, long-neglected and problematic aspect of sub-national public finances in Indonesia. There are a number of potential difficulties with the design and execution of the reforms, however, which collectively do not inspire much optimism for rapid progress in reviving financial flows to the sub-national public sector. Still, even halting advances in debt restructuring can substantially increase local infrastructure investment in the long run.
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    The Impact of Decentralization on Subnational Government Fiscal Slack in Indonesia
    ( 2009-07) Lewis, Blane D. ; Oosterman, Andre
    Since Indonesia began implementing its decentralization program in 2001, subnational unspent balances have grown rapidly and have reached levels that many officials find unreasonably high. But the extent to which subnational government reserves are excessive, in general, is not obvious. A not implausible decrease in the price of oil would reduce transfers to subnationals significantly and, if sustained, could possibly eliminate reserves in a relatively short time. Central government should not take any immediate action to reduce subnational slack resources directly but should instead focus on removing the underlying causes of such.
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    Understanding Variations in Local Conflict: Evidence and Implications from Indonesia
    ( 2009) Barron, Patrick ; Kaiser, Kai ; Pradhan, Menno
    Recent studies of large-scale "headline" conflicts have excluded consideration of local conflict, in large part due to the absence of representative data at low levels of geographic specification. This paper is a first attempt to correct for that by assessing the incidence, impacts, and patterns of local conflict in Indonesia. We employ a combination of qualitative fieldwork with an exploratory statistical analysis of the 2003 Village Potential Statistics collected by the Bureau of Statistics (Potensi Desa-PODES), which maps conflict across all of Indonesia's villages/neighborhoods. Violent conflict can be observed throughout the archipelago. The qualitative analysis shows that local conflicts vary in form and impacts across districts, and that local factors are key. The quantitative analysis, which excludes high conflict areas of Indonesia, confirms the importance of economic factors, with positive correlations between violent conflict and poverty, inequality, and variables measuring economic development. Clustering of ethnic groups and ill-defined property rights were also positively associated with violence.
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    Determining Citizen Satisfaction with Local Public Education in Indonesia : The Significance of Actual Service Quality and Governance Conditions
    ( 2009) Lewis, Blane D. ; Pattinasarany, Daan
    Indonesians appear content with local public education, despite independent concerns about quality in the international context. Over 85 percent of respondents from the recent Governance and Decentralization Survey claim to be at least somewhat satisfied with primary school education. This study argues that the generally high levels of reported satisfaction are probably exaggerated because of courtesy bias, low expectations, and optimistic predispositions. Survey responses are best thought of as indicative of relative, and not absolute, levels of satisfaction. The empirical examination shows that objective measures of service quality and governance conditions are both significant determinants of the probability that households are satisfied with local public education. The significance of governance holds regardless of whether pertinent variables are assumed to be exogenous or whether they are specified as endogenously determined, although the endogenous specification performs much better, in general. The evidence suggests a cautious approach toward the use and interpretation of score card initiatives, which attempt to employ citizen satisfaction as a close proxy for actual quality of services, in nonrandom samples, and without controlling for other factors. In addition, the results provide a novel rationale for improving the local governance environment.
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    The Impact of Minimum Wages on Employment in a Low-Income Country : A Quasi-natural Experiment in Indonesia
    ( 2008) Alatas, Vivi ; Cameron, Lisa A.
    The extensive literature on the employment impact of minimum wages has focused heavily on industrialized nations and very little on the developing world, despite the importance of minimum wages in many low-income countries. One such country, Indonesia, was the setting for an unusual quasi-natural experiment: not only did minimum wages in Indonesia increase sharply between 1990 and 1996, but the resultant increment in average wages varied markedly across different areas in Greater Jakarta. The authors use household-level labor market data to determine the extent of compliance with the legislation, then estimate the employment impact in the clothing, textiles, footwear, and leather industries based on a census of all large and medium-sized establishments. The evidence suggests that there was no negative employment impact for large establishments, either foreign or domestic, but that workers in smaller, domestic establishments may have suffered job losses as a result of minimum wage increases.