Corruption and local democratization in Indonesia: The role of Islamic parties

J. Vernon Henderson, Ari Kuncoro

Research output: Contribution to journalArticlepeer-review

38 Citations (Scopus)


Indonesia has a tradition of corruption among local officials who harass and collect bribes from firms. This paper examines whether corruption is affected by local democratization and by the party composition of local assemblies. Democratization occurred in 1999 and decentralization in 2001. We have firm-level data for 2001 and 2004. The 2001 data benchmark corruption at the time of decentralization. We find that corruption declines between 2001 and 2004 overall, but much less so in districts with more secular party as opposed to Islamic party representatives in district assemblies. For a larger sample of districts, correspondingly, we find that corruption in 2004 is more in districts which voted more in favor of secular party representatives in the first elections in 1999. We argue that the effects seem to be causal, over above any effects of changing religiosity and economic circumstances across districts.

Original languageEnglish
Pages (from-to)164-180
Number of pages17
JournalJournal of Development Economics
Issue number2
Publication statusPublished - Mar 2011


  • Corruption
  • Democratization
  • Islamic parties
  • Political economy


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