Decentralisation and corruption: an empirical analysis of regional autonomy in Indonesia

Hermawan, . (2026). Decentralisation and corruption: an empirical analysis of regional autonomy in Indonesia. University of Birmingham. Ph.D.

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Abstract

The nexus between decentralisation and corruption remains a subject of considerable scholarly debate, with empirical findings often varying due to differences in methodological approaches, measurement, and contextual factors. Indonesia’s post-1998 transition from an authoritarian, highly centralised regime to a decentralised democratic polity—enacted through the so-called ‘big bang’ reforms—offers a critical case for examining this complex relationship. These reforms, comprising sweeping fiscal, administrative, and political decentralisation, fundamentally reconfigured the governance landscape, particularly at the district and city levels. Despite the scale and significance of these changes, there exists a notable paucity of single-country, subnational analyses of the decentralisation–corruption nexus in Indonesia, a gap this thesis seeks to address.

Drawing on qualitative case studies from two provinces (South Sumatra and Lampung) and two districts (Banyuasin and Gunungkidul), this research interrogates how the various dimensions of decentralisation—political, administrative, and fiscal—interact to shape the propensity for corruption among local officials. The study employs a robust methodological framework, integrating semi-structured interviews with key stakeholders, documentary analysis, and triangulation of primary and secondary data, underpinned by Principal-Agent, Collective Action, and New Institutional Economics theories.

The findings reveal that, contrary to the normative expectation that decentralisation would curtail corruption by bringing government ‘closer to the people’ and enhancing accountability, Indonesia’s experience has been more ambivalent. Decentralisation has, in practice, redistributed rather than reduced corruption, shifting opportunities for rent-seeking from the centre to the peripheries. Political decentralisation, through the introduction of direct local elections and increased autonomy for local executives and legislatures, has facilitated elite capture and the entrenchment of political dynasties. Weak party institutionalisation, limited capacity for oversight within local legislatures, and underdeveloped civil society participation have collectively undermined mechanisms of vertical and horizontal accountability.

Administrative decentralisation, particularly the devolution of personnel management, has enabled local leaders to consolidate patronage networks, with recruitment, promotion, and remuneration processes frequently subject to political interference, nepotism, and non-meritocratic practices. Incomplete reforms and the retention of central control over certain bureaucratic functions have further exacerbated inefficiencies and provided fertile ground for corruption.

Fiscal decentralisation has granted local governments greater discretion over expenditure, but revenue-raising policy remains largely centralised, resulting in a persistent reliance on central transfers and a mismatch between responsibilities and resources. This fiscal imbalance, coupled with weak internal controls and audit capacity, has created opportunities for budgetary manipulation, procurement fraud, and collusion between local officials and private interests.

The study concludes that Indonesia’s decentralisation reforms, while expanding democratic space and local autonomy, have not inherently reduced corruption. Instead, they have produced new modalities and loci of corrupt practices at the local level, shaped by persistent institutional weaknesses, legacy structures of centralisation, and the adaptive strategies of entrenched elites. Effective anticorruption strategies must therefore move beyond formal institutional design to address underlying political, administrative, and fiscal vulnerabilities. Key policy recommendations include strengthening the independence and capacity of oversight institutions such as the Supreme Audit Agency (BPK) at the local level; reforming political finance to reduce the influence of money politics and elite capture; depoliticising bureaucratic appointments through merit-based recruitment and transparent promotion systems; and enhancing fiscal transparency by mandating public disclosure of budgets and procurement processes. Furthermore, empowering civil society and fostering meaningful citizen participation are essential to building resilient, accountable local governance.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):