Strengthening Regional and Local Economy

It is argued in Indonesia that many local governments experience challenges in governing  their regions and in improving locals’ standard of living. Some studies suggest that more authorities to local government could not by itself boost economic performances of local and regional economies. Decentralisation has not significantly linked to better economic outcome measured by gross domestic product. The most common factors mentioned in literature that has undermined regional development under decentralisation in Indonesia are significant heterogeneity in endowments, factor immobility and endogenous deterioration of local institutions, including corruptive behaviour in the local government administration. These arguments serve as an introduction to the following ten chapters on strengthening regional and local economy in Indonesia.