Paper short abstract:

This paper investigates the relationship between local direct elections and the change in targeted social expenditure using panel data set for Indonesian provincial level from 2001 to 2012. The quantitative analysis is accompanied with a preliminary study on platforms of incumbent political parties.

Paper long abstract:

What is the effect of deepened democracy and broadened political participation on public expenditures for social programmes? Since the end of the Asian financial crisis in 1998, Indonesia has undergone a deep transformation of its political system. The adoption of constitutional amendments throughout 'Reformasi' has affected not only electoral franchise but has also had far-reaching implications for the nature of social protection. This paper investigates the relationship between local direct elections and the change in social spending—controlling for GDP per capita, revenues, and wide-range socio-welfare indicators at the regional level—through a time-series cross-sectional panel data set for 33 provinces in Indonesia from 2001 to 2012. Preliminary analysis suggests that ideological platforms of incumbent political parties do not explain the pattern of social spending. While the results of panel data analysis indicate that local governments increase the allocation of social spending favourably during election periods. Furthermore, local revenues tend to be influential in determining the budget for social spending. I also find evidence that indicators on social welfare generally does not relate to the expansion of social protection programmes. This paper ends with a cautionary note from case studies in two districts, pointing to ways in which combination of oligarchic power relations, elite capture, and limited capacity still undermine the implementation, despite expansion of coverage.