Journal articles published externally

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These are journal articles by World Bank authors published externally.

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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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A Note on Rice Production, Consumption and Import Data in Indonesia

2008, Rosner, L. Peter, McCulloch, Neil

Debate about Indonesian rice policy has focused on estimates of production and consumption levels, and the level of imports they imply. However, Indonesian rice production and consumption data are controversial. Rice consumption as estimated from household survey data is much lower than officially reported rice production. This suggests that Indonesia is a net rice exporter, but in fact it has generally been a net importer. Some researchers argue that rice consumption data are underestimated; others contend that production is over-estimated because of inaccuracies in 'eye estimates' of harvested area. This paper reviews how rice production and consumption are measured, notes major weaknesses, and surveys attempts to reconcile consumption and production data and examine their consistency with rice import data. It concludes that rice prices are the only accurate indicator of the balance between supply and demand, and hence of the appropriate level of imports.

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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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Subject Pool Effects in a Corruption Experiment: A Comparison of Indonesian Public Servants and Indonesian Students

2009, Alatas, Vivi, Cameron, Lisa, Chaudhuri, Ananish, Erkal, Nisvan, Gangadharan, Lata

We report results from a corruption experiment with Indonesian public servants and Indonesian students. Our results suggest that the Indonesian public servant subjects have a significantly lower tolerance of corruption than the Indonesian students. We find no evidence that this is due to a selection effect. The reasons given by the subjects for their behaviour suggest that the differences in behavior across the subject pools are driven by their different real life experiences. For example, when abstaining from corruption, public servants more often cite the need to reduce the social costs of corruption as a reason for their actions, and when engaging in corruption, they cite low government salaries or a belief that corruption is a necessary evil in the current environment. In contrast, students give more simplistic moral reasons. We conclude by emphasizing that results obtained from different subject pools can complement each other in illuminating different aspects of the same problem.

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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.

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The Simple Economics of Extortion: Evidence from Trucking in Aceh

2009, Olken, Benjamin A., Barron, Patrick

This paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory. We designed a study in which surveyors accompanied Indonesian truck drivers on 304 trips, during which they observed over 6,000 illegal payments to police, soldiers, and weigh station attendants. Using plausibly exogenous changes in the number of checkpoints, we show that market structure affects the level of illegal payments. We further show that corrupt officials use complex pricing schemes, including third-degree price discrimination and a menu of two-part tariffs. Our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy.

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Mental Health in Sumatra after the Tsunami

2008-09, Frankenberg, E., Friedman, J., Gillespie, T., Ingwersen, N., Pynoos, R., Rifai, I. U., Sikoki, B., Steinberg, A., Sumantri, C., Suriastini, W., Thomas, D.

Objectives. We assessed the levels and correlates of posttraumatic stress reactivity (PTSR) of more than 20000 adult tsunami survivors by analyzing survey data from coastal Aceh and North Sumatra, Indonesia. Methods. A population-representative sample of individuals interviewed before the tsunami was traced in 2005 to 2006. We constructed 2 scales measuring PTSR by using 7 symptom items from the Post Traumatic Stress Disorder (PTSD) Checklist-Civilian Version. One scale measured PTSR at the time of interview, and the other measured PTSR at the point of maximum intensity since the disaster. Results. PTSR scores were highest for respondents from heavily damaged areas. In all areas, scores declined over time. Gender and age were significant predictors of PTSR; markers of socioeconomic status before the tsunami were not. Exposure to traumatic events, loss of kin, and property damage were significantly associated with higher PTSR scores. Conclusions. The tsunami produced post traumnatic stress reactions across a wide region of Aceh and North Sumatra. Public health will be enhanced by the provision of counseling services that reach not only people directly affected by the tsunami but also those living beyond the area of immediate impact.

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Political Accountability, Fiscal Conditions and Local Government Performance : Cross-Sectional Evidence from Indonesia

2008, Eckardt, S.

Why are some local governments more successful than others in managing resources and delivering services? And even more vitally, how can malfunctioning governments be reformed so that they perform their responsibilities more effectively? This article contributes to our understanding of theses overarching questions by exploring the interactions between political institutions and public sector performance in the context of decentralisation and local governance. It shows-both theoretically and empirically-that performance outcomes are determined by the extent to which people can hold their governments accountable through political institutions. The basic hypothesis underlying this research is that political accountability, either by encouraging sanctions upon non-compliant public agents or simply by reducing the informational gap regarding government activities, will create forceful incentives for elected officials and civil servants to reduce opportunistic behaviour and improve performance. Using a cross-sectional regression the hypothesis is empirically tested against evidence from newly empowered local governments in Indonesia. The empirical findings broadly support our hypotheses. Improved public services on the ground, both in terms of quantity and quality, require informed and well functioning decision-making processes that allocate resources to priority areas that meet the demand of the broader community. Copyright (c) 2008 John Wiley & Sons, Ltd.