ABSTRACT
In Indonesia, centralizing government authority used to be considered a way of preserving national unity, promoting economic growth and maintaining national stability. For more than 30 years, Indonesia enjoyed growth and political stability because authority was centralized. Economic growth was based on centralized authority even though Indonesia is an archipelagic country comprising various cultures, ethnic minorities and diverse communities. Highly centralized public sector decision-making, however, reduces accountability, retards the development of public infrastructure, adversely affects rates of return on public sector projects and constrains the development of local institutions.
