Explaining the Perpetuation of Inequality in Indonesia

Rahardhika Utama (Northwestern University)

Abstract

Why has inequality increased in Indonesia since the transition to democracy? Notwithstanding a substantial increase in realized state expenditures for redistributive programs and robust political participation through elections to demand more equal resource distribution, economic inequality is worsening in post-authoritarian Indonesia. This paper investigates state processes that perpetuate unequal resource distribution by examining linkages between political leaders and bureaucrats from the period of administrative state building under authoritarianism to contemporary democratic Indonesia. The transition to democracy generates more opportunities for local state actors to misuse public funds for their political interests through the mechanism of bureaucratic clientelism. A close look at the linkages between these state actors at the local redistributive government agencies shows that the practices of bureaucratic clientelism reduce the efficacy of redistributive policies that aim to address inequality. Using a within case analysis strategy, which traces the independent variable Causal Process Observation constructed from interviews and archival work, this paper argues that the existence of bureaucratic clientelism at the level of local governments is a necessary condition for the perpetuation of economic inequality following the transition to democracy in Indonesia. This study also addresses key debates around democracy and inequality, state autonomy, as well as bureaucracy and policy implementation.

Keywords: democracy, inequality, redistribution, bureaucratic clientelism