Two Decades of Fiscal Decentralization : Implications on the Regional Development in Indonesia

The implementation of fiscal decentralization in the last two decades has produced various findings: positive and negative. Several studies have evaluated fiscal decentralization as an ideal system so that development goals can be accustomed to satisfy the local’s preferences, so that the government will be more accurate in distinguishing citizens' demand for services compared to the central government. However, other studies consider that the fiscal decentralization that started in 2001 was lack of preparation from the regions. Consequently, the implementation of decentralization leads to widening the gap between regions, as well as increasing the potential for corruption by local governments. Therefore, this study aims to discuss the extent to which fiscal decentralization, an administrative reform, can be a driver of development in regions in Indonesia. Systematic review method is employed in this study to collect and analyze studies related to the impact of fiscal decentralization on the sectors that are the focus of this study, including education, health, economy, and public services. This study finds that decentralization has not provided optimal benefits for the education, health, economy and public services sectors