I. Conceptual Framework and Methodology

A. Definition of Governance

Partnership Governance index understands governance as the process of formulation and implementation of rules and regulation through interaction between state, civil society, and economic society.

B. Arena of Governance

From the definition above PGI derived four arenas of governance government, bureaucracy, civil society and economic society.  Each is operationally defined as follows:

1. Government is the policy making bodies. Government in this case refers to governor and provincial parliament (DPRD). The partnership identifies the key government functions that need to be measured include regulatory function, development coordination, and budget allocation function.
2. Bureaucracy is the implementing body that serves at the same time as a bridge between government and the public. In this case bureaucracy includes the government offices and agencies at the provincial level.  Among the many important functions of bureaucracy, the key functions that will be assessed in this study are public service, local revenue collection and the regulation of the local economy.
3. Civil Society constitutes individuals or groups of people that participate actively in governance processes. From among the many functions of the civil society, the Partnership considers the public policy advocacy function as the most important function to be assessed.
4. Economic Society consists of individuals or groups of people that engage in profit-oriented enterprises to the provision of goods and services. The functions of the economic society that will be assessed in this study are the participation of the economies actors in government tender and project implementation.

C. Principles

1. Participation:  involvement of the stakeholders in the decision-making processes within each arenas
2. Fairness: condition where the policy and programs taken in governance are applied fairly (without discrimination) to everyone without consideration of his/her status, ethnicity, religious affiliations, or sex.
3. Accountability: condition where officials, institutions, organization in each arena are held responsible for their conduct.
4. Transparency: condition where decisions made by officials, institutions, organization in each arena open to the public to observe, scrutinize and evaluate.
5. Efficiency: condition where the policies and programs implemented have utilized the resources – human, financial and time – in an optimal manner
6. Effectiveness: where the objectives of the policies and programs (output) have been achieved in line with the intended purpose (constitutional mandate –-communities that are intelligent, prosperous, just and civilized—becomes the parameter)

D. Matrix

Cross tabulation the four arena and six principles of good governance yields the following governance matrix:

	Participation	Fairness	Accountability	Transparency	Efficiency	Effectiveness
Government: Regulatory Framework Budget Allocation Coordination of Development
Bureaucracy Revenue Collection Public Service Regulating Economy
Civil Society Advocacy
Economic Society Government Tender and Project Implementation

 

II. Methodology

The arenas, principles and indicators used in the Partnership Governance Index (PGI) have different levels of contribution to the promotion of good governance.  Therefore, one of the key steps before using the arenas, principles and indicators in assessing the governance performance of the provinces is to determine the weights of each arena, principle and indicator.  The weighting method employed in the PGI is the Analytical Hierarchy Procedure (AHP).
This method relies on expert judgment/opinion for the weighting of indicators. The experts are person who having knowledge and expertise the concerned indicators. Hence, the experts include academician, government officials, NGO Workers, business actors and other relevant individuals.
AHP uses a pair ways comparison to obtain the weight of each indicator. The first step in the AHP method is establishing the hierarchy of the arenas, principles, and indicators. Subsequently, structured interview based on this questionnaire is conducted.

A. Indicators

To assign values to a principle in a certain area we will need indicators. The indicators will be derived from the functions of the areas, i.e. government, bureaucracy, civil society, and economic society. The number of indicators will vary from one principle to the other in each area, because the Partnership team selects indicators that are the most important, most sensitive and able to differentiate between one province and the others. Sometimes the indicator selected to assess a principle is only one, and this will serve as a proxy for the other indicators that need not be assessed.  

In total the study employs 75 indicators. This number is divided into 33 indicators for Government, 20 indicators for Bureaucracy, 9 indicators for Economic society, and 13 indicators for Civil society. The distribution of indicators according to the Area and Function is presented in the following table.
 

Table 1. Number of Indicators for Each Area and Function

Area	Function	Number of Indicators
Government	Regulatory framework	9
	Budget allocation	14
	Coordination of development	10
Bureaucracy	Revenue collection	6
	Public services	8
	Regulating the economy	6
Economic society	Government tender and project implementation	9
Civil society	Advocacy	13
Total		75

To make the identification easier, each indicator will be coded. For example, we abbreaviate each arena and principle as follows:

• Arena: G=government, B=bureaucracy, E=economic society, dan C=civil society
• Prinsip: P=participation, F=fairness, A=accountability, T=transparency, I=efficiency, dan E=effectiveness

Example:

1. G1T1 means the first indicator in the area of Government, the first function (regulatory framework) in the transparency principle
2. B2F1 means the first indicator in the area of Bureaucracy, the second function (public service) for fairness principle

B. Structure of PGI

C. Weight of the arenas, principles, and indicators

The AHP is selected to obtain:

• Weight of the arena
• Weight of each principle for each arena
• Weight of indicator

D. The weight of the principles for each arena

E. Types of Data

1. Objective data, i.e. statistical data or data from various different documents that demonstrate the presence of related activities. The objective data can also come from the four areas being studied.
2. Well Informed Persons (WIPs), persons who interact directly with governance processes.

F. Sources of Objective Data

1. The latest local budget (APBD) and related documents such as the local development plans (RPJPMD, RKPD, Local Legislation Program, KUA, Financial Notes, PPAS)
2. Minutes of coordination meetings
3. Field visits by Commissions in the Provincial Parliaments (DPRD) to the districts/cities as a means of coordination
4. BPK audit report
5. Local Statistics (population, population under poverty, unemployment rate, PDRB, Gini ratio, costliness index, health statistics, education statistics and economic indicators).

G. Indexing Proccess

H. Index Scale