FISCAL EQUALISATION MECHANISM

This book offers a unique study of public finances in a big country with the population of more than 205 million and consisting of about 500 autonomous localities. Indonesia has embarked on a dramatic change toward democratisation as well as decentralisation since the fall of an authoritarian regime in 1998. Many experts believe that the decentralisation has the potential to produce greater inequality among communities and regions. Therefore, a study that explores the disparities between localities and the fiscal equalisation mechanism to address such inequality is certainly important. Despite an Indonesia’s study, it also provides a thorough theoretical review about fiscal equalisation from economics, equity and political point of views. Moreover, for those who are interested in learning the system and the process of decentralisation in developing countries, this book provides an insight experience about a ‘big bang’ approach of decentralisation. Most of all, an example of intergovernmental financial relations in a unitary country is explored here.