Relative Abundance in the Land of Oil: Reorganization of Extractive Resource Governance in Decentralizing Indonesia

Abstract

This study aims to examine the governance of extractive resources by the state as an axis of development at the national and subnational levels. This study focuses on Indonesia and Bojonegoro Regency as the main unit of analysis. Using the method of historical sociology, this article argues that the institutional capacity of the state in the governance of extractive resources, particularly oil, depends on the extent to which the mechanisms of autonomy and distribution of state power are reorganized to achieve developmental transformation. The combination of historical evidence not only adds to the theoretical understanding of state social power but also contributes to development theory by adding a historical dimension. As a country with abundant natural resources, Indonesia has faced challenges in the governance of extractive resources since colonial times. The abundance of natural resources is not always linear with development outcomes in each period of governance. Indonesia has seventeen oil and gas-producing provinces. However, the resource curse still applies in eight provinces where the number of poor people is higher than the national average. The governance of Indonesia's extractive industries is no longer monopolized by the national government but involves subnational governments. Politically, many local governments have complained that the process of calculating, distributing and reporting oil and gas revenue-sharing funds often creates tensions between central and local governments. Synergies between the state and civil society in the governance of extractive resources are needed to accelerate development transformation. Historical experience shows that the limited distributive power of civil society in extractive resource governance hinders the process of accelerating development transformation in Indonesia.