Fiscal Capacity as a Correlate of Local Government Performance in Indonesia

This study examines fiscal capacity as a correlate of local government performance in Indonesian district and city governments and assesses whether debt pressure adds a stable association. Using secondary data for 454 districts and cities in 2023, the analysis combines partial least squares structural equation modeling with control-adjusted robustness tests based on standardized observed indicators. The inferential target is explicitly cross-sectional: the study estimates contemporaneous differences among jurisdictions in 2023 and does not claim temporal ordering or causal effects. Fiscal capacity is positively associated with the performance composite and with public service, regional innovation, electronic government, and human development in the separate outcome models. Debt pressure shows a negative total and indirect association in the PLS-SEM model, but the debt-performance result is sensitive to controls and alternative debt measurement. The central empirical finding is therefore the consistent positive association between fiscal capacity and local government performance, while the evidence on debt pressure is more limited and specification-sensitive. The study contributes to public administration scholarship by clarifying what can be learned from a large national cross-section while distinguishing contemporaneous association from longitudinal or causal inference. JEL Classification: H72, H74, H83