Analysis of Intergovernmental Transfer and Interregional Basic Services Inequality in Indonesia

Abstract

In this globalization era, the problem of interregional basic service inequality still occurs, even though fiscal decentralization has been implemented in Indonesia since 2001. Intergovernmental transfer with three instruments, such as shared revenue, general purpose grant, and specific purpose grant aim to support the implementation of local government authority. The purpose of this study is to analyze basic services inequality between provinces in Indonesia since the implementation of fiscal decentralization, as well as recommended policies to reduce these basic service inequalities. This study used a quantitative approach. The data used in this study was secondary data obtained from several government agencies. The object of the research is the variation of interregional basic service inequality. This research was conducted in 32 provinces in Indonesia. Data is processed with SPSS and Microsoft Excel software. The result found that there are still basic services inequalities between provinces in Indonesia, including in education, in the health sector, basic infrastructure such as access to clean water, access to proper sanitation and the percentage of poverty levels. This study also found components of the intergovernmental transfer that affect the basic services inequality.Keywords: Basic service inequality, intergovernmental transfer, decentralizationJEL Classifications: O15, O18, O38