Decentralization and Social Capital in Indonesia

Indonesia has experienced more than 10 years of decentralization. Starting in 2001, and called as “Big Bang” decentralization, various types of decentralization have been occurring. In the time being, the causality between decentralization and economic growth seems to be ambiguous (Fauziah, 2007). On the other hand, social capital is a new approach to explain social relationship within the population in a region. Higher social capital, i.e. stronger trust, and network within the population in a region, is viewed to have positive effects on economic growth (Beugelsdijk & van Schaik, 2005; Chou, 2006). In a nation endowed with diverse characteristics of population and culture, regions across Indonesia may have different social capital strength. Furthermore, it is not yet clear whether decentralization policy translates to strengthening social capital. Here, we investigate the impact of decentralization on regional social capital and evaluate how types of decentralization affect social capital differently