Heterodox Governance:

Transcription

1 Heterodox Governance: Political Economy of Local Policy Reform in Post-Suharto Indonesia Christian von Luebke, APARC

2 In a Nutshell Current Good Governance Orthodoxy Small Government, Sound Markets, Strong Society Changes of macro-structures induce better government Overshot the mark: bad government + good markets & society A More Heterodox Perspective Significance ifi of government supply (leadership) Significance of meso structures (local economy, society, media) Societal demand emerging through informal, non-traditional channels

3 Outline 1) Good Governance Zeitgeist 2) Indonesian Case 3) Reform Agency a) Case Study Selection b) Empirical Findings c) Political Economy Discussion 4) Rf Reform-Enhancing Structures 5) Implications

4 1. Good Governance Zeitgeist i t

5 Development Paradigm Washington Consensus Market Elite Corruption State Failure Corporatism 1980s Public Choice 1970s Modernization 1960s Social Capital E-Asian Miracle 1990s Good Governance 2000s Society 1950s Bureaucracy Elite Colonial s Postwar Keynesian State

6 Good Governance Orthodoxy Good Governance = Efficiency, Responsiveness & Low Corruption Improvement/Reform = Market Forces & Societal Pressures Moving Governments Closer to People and Markets Measures:! Decentralization i! Democracy Promotion! Private-Sector Development

7 2. Indonesian Case

8 Post-Suharto Indonesia: 450 Decentralized District i t Polities

9 Variation in Local Government Performance Tax 1 2 x Bill Evaluat tion Licen nse Administr ration Districts (in acending order) Districts (in acending order) 1 Fairness s of Tender 9 Li icence Corru uption (000 R Rps) Districts (in acending order) Districts (in acending order)

10 What drives good governance? Why do some local governments exhibit conducive, efficient, and non-corrupt policies and practices while others obstruct their economies with trade-distorting bills, administrative red tape, and high levels of corruption? 1) Reform Agency (controlling for structure)! Societal Pressure (demand-pull, d market/society)! Leadership Pressure (supply-push, state/elite) 2) Reform-enhancing Structures! Characteristics of Economy/ Society/ Media

11 3. Reform Agency

12 Mixed-Methods Approach Triangulation of Field and Statistical Observations 1) Qualitative Case Studies " Data from 10 Districts ( ): " 1000 Local Business Questionnaires " 130 In-depth Interviews 2) Quantitative Analyses " OLS Analyses " Dataset of 200+ districts

13 Case Selection West Sumatra Solok Leadership Pesisir Central Java Kebumen Klaten Bali Karang Gianyar West Nusa Tenggara Bima Lombok Societal Pressure

14 Leadership Cases

15 Societal Pressure Cases

16 Case Study Findings

17 Differences in Administrative Quality (1) Differences in One-Stop Services aligned with differences in Leadership Qualities West Sumatr ra Solok: Score 4.2 Good Pesisir: Score 1.7 Poor Cen ntral Java Kebumen: Score 2.5 Fair Klaten: Score 1.0 Very Poor

18 Differences in Administrative Quality (2) Mixed results with regard to Societal Pressure Cases Ba ali Gianyar: Score 3.7 Good Karang: Score 1.8 Poor NTB Bima: No Score B Very Poor Lotim: Score 2.8 Fair not existent despite earmarked funds

19 Public Recruitment Corruption??

20 Overall Evaluation : Leadership Cases Good

21 Overall Evaluation : Societal Pressure Cases

22 200-District Dataset

23 OLS Results Leadership Societal Pressure

24 Political Economy Explanations

25 Strong Significance of Leadership District heads have strong powers and rising incentives to initiate good governance reforms! Historically powerful, even more since decentralization! Introduction of direct (FPTP) district head elections! Rise of media coverage & public interest! Good governance initiatives promise electoral success, career advancement, and additional donor funding

26 Weak Significance of Societal Pressure After 30 years of authoritarian control societal checks and balances are yet to fully unfold Citizens/Small firms: depolitization, retaliation risks, free-riding riding Chinese firms: socio-ethnic vulnerability Local NGOs: promising impulses, but government dependency Large Firms: benefits in close/collusive ties with officials District i t Councillors: national party boards - rather than constituents t

27 4. Reform-Enhancing Structures (work in progress )

28 Structures promoting Good Governance (1) Which structures create incentives for reformist leadership? (2) Which structures encourage public-private reform? Meso Structures (public-private private interfaces)! Composition of Interests in Local Economy & Society! Rise of Independent Media & IC Technology

29 The Case of Surakarta City

30 The Case of Surakarta City

31 Constellations of Economic Groups II Source: Authors focus group with 20 private-sector representatives in Surakarta.

32 Local Economy and Society Moderate Concentration Hypothesis Too Fragmented! collective action problems (Olson 1965, Frieden 1991) Too Concentrated! state capture (Grossman/Helpman 1994, Hellman 1998) Balance: Group Coherence Group Competition Groups strong enough to voice & diverse enough to keep each other in check! Leaders required to reach out to broader constituency! Groups cannot easily capture government Likely result: more inclusive, responsive reform coalitions

33 Media and IC Technology Rise of informal, media-based societal influence Anonymous Media Channels! Virtual Complaint Boxes (SMS Hotlines)! Independent d Local Media! Call-In Shows (with Mayors, Local TV & Radio) Lower Repercussion Costs for Voicing Concerns

34 5. Implications

35 Implications Heterodox Pathways to Good Governance The Baby and the Bathwater In early democratic transitions, unreasonable to dismiss executive competence in favor of societal checks Good Governance in Transition leadership qualities (for better or worse) meso (not only macro) structures societal influence grows with (a) independent d media/ict and (b) moderate economic concentration

36 Thank You Very Much! Related Articles: von Luebke, C. forthcoming, The Political Economy of Local Governance, Bulletin of Indonesian Economic Studies, Aug Von Luebke, C. forthcoming, Heterodox Reform Symbioses Asian Economic Journal, Sep 2009, (with N. McCulloch and A. Patunru). cvluebke stanford.edu

37 Annex Additional Tables

38 Leadership Indicators

39 Societal (Business) Pressure Indicators

40 One Stop Service Indicators

41 Evaluation Intervals for