Factors Influencing Sustainable Local Development in Indonesia’s Fiscal Decentralization Policy: Four-Dimensional Model Performance of Development

Abstraksi

The notion of sustainable development will be an essential and popular issue to achieve the 2030 Agenda for 17 Sustainable Development Goals (SDGs). Although sustainability concept is nowadays broadly accepted by all scholars and government stakeholders, there are still concerns that need to be addressed at the operational level in local scale policy. Some researchers said that the success of sustainable local development will be contingent on the important role of local governments in the fiscal decentralization policy. Yet, the prominent issue of fiscal decentralization in supporting sustainable local development process has not become a serious concern by all stakeholders in Indonesia. Therefore, it is necessary to investigate this phenomenon with the certain measurement on explaining the quality and the impact of Indonesia’s fiscal decentralization policy to sustainable local development in Indonesia. With regard to some challenges above, the study examines the link between policy and development using empirical data on decentralization and sustainable development indicators in 33 provinces of Indonesia. Firstly, we will develop four-dimensional model (social, economic, environmental, and institutional dimension) using structural equation model for creating a composite index of sustainable local development. Secondly, the research will evaluate the consequences of Indonesia’s fiscal decentralization policy for sustainable local development indicators with practicing the multiple regression model on panel data. Finally, this research’s implication is to contribute in an understanding of the performance and impact of Indonesia’s fiscal decentralization policy and regulation on socio-economics, environmental, and institutional approaches to sustainable local development in Indonesia.