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<p>Governance quality and economic performance are central concerns in the development trajectories of Global South countries, where structural inequalities and institutional fragmentation often constrain inclusive progress. Within this context, decentralization is expected to strengthen local economic capacity, yet evidence on its effectiveness remains inconclusive due to limited tools for objective policy performance evaluation. Existing metrics often rely on output indicators and failing to distinguish between natural resource endowments and policy-driven structural change. This study responds to that gap by introducing the Municipal Economic Development Policy Performance Index (MEDPPI). Unlike conventional measures, MEDPPI integrates Location Quotient (LQ) and Dynamic LQ (∆LQ) analyses to enhance evaluation accuracy by isolating regional competitiveness from aggregate growth. This offers a composite representation of subnational economic vitality by three versions. Using panel data from 34 provinces and 514 municipalities across Indonesia between 2010 and 2023, the study reveals fewer than half of the municipalities demonstrating sustained economic progress. This finding indicates a concerning stagnation in decentralized governance outcomes, validating MEDPPI’s utility in diagnosing regions where policy interventions have failed to trigger structural transformation. Hence, the analysis examines linkages between MEDPPI and social indicators such as human development, poverty, unemployment, and inequality, finding that these relationships remain fragmented and context-dependent. The findings underscore that economic gains under decentralization do not automatically deliver social inclusion. By providing a new methodological instrument and empirical evidence, this study advances academic and policy impact evaluation on local governance and development, establishing a foundation for more coherent, data-driven strategies toward sustainable and equitable regional growth.</p>

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A composite municipal economic policy index and social development comparisons in the Global South: Evidence from Indonesia, 2010–2023

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年6月25日

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  • Meisy Monica Adeline,
  • Fadillah Putra,
  • I Gede Eko Putra Sri Sentanu

摘要

Governance quality and economic performance are central concerns in the development trajectories of Global South countries, where structural inequalities and institutional fragmentation often constrain inclusive progress. Within this context, decentralization is expected to strengthen local economic capacity, yet evidence on its effectiveness remains inconclusive due to limited tools for objective policy performance evaluation. Existing metrics often rely on output indicators and failing to distinguish between natural resource endowments and policy-driven structural change. This study responds to that gap by introducing the Municipal Economic Development Policy Performance Index (MEDPPI). Unlike conventional measures, MEDPPI integrates Location Quotient (LQ) and Dynamic LQ (∆LQ) analyses to enhance evaluation accuracy by isolating regional competitiveness from aggregate growth. This offers a composite representation of subnational economic vitality by three versions. Using panel data from 34 provinces and 514 municipalities across Indonesia between 2010 and 2023, the study reveals fewer than half of the municipalities demonstrating sustained economic progress. This finding indicates a concerning stagnation in decentralized governance outcomes, validating MEDPPI’s utility in diagnosing regions where policy interventions have failed to trigger structural transformation. Hence, the analysis examines linkages between MEDPPI and social indicators such as human development, poverty, unemployment, and inequality, finding that these relationships remain fragmented and context-dependent. The findings underscore that economic gains under decentralization do not automatically deliver social inclusion. By providing a new methodological instrument and empirical evidence, this study advances academic and policy impact evaluation on local governance and development, establishing a foundation for more coherent, data-driven strategies toward sustainable and equitable regional growth.