Indonesia’s Decentralization Experiment: Motivations, Successes, and Unintended Consequences

Since 2001, Indonesia has undergone a rapid and extensive programme of decentralization of governance and resources from the centre to local level. This devolution has created a new class of regional political elites and has shifted significant power back to sub-national levels in Indonesia’s centuries’ long history of centre-local tensions. While the political motivations of mitigating centrifugal pressures appear to be vindicated, the anticipated gains in service provision and downstream economic impacts have not uniformly materialized: efficiency gains in some regions have been offset by the widespread emergence of clientalistic practices and fiscal inefficiencies. Recent efforts towards limited administrative and political recentralization underscore the tension that remains between the centre and local governments.