From Regional Fiscal Capacity to Green Growth: An Integrative Conceptual Review of Fiscal Conversion, Sustainable Infrastructure, and Innovative Financing in Indonesia
Abstract
This study aims to explain how regional fiscal capacity can be transformed into green-development outcomes in Indonesia and to develop an Integrated Regional Fiscal Conversion Framework for subsequent empirical testing. Using a structured integrative conceptual review combined with policy-document analysis, the study examined 26 sources, comprising 18 scholarly studies or research papers and eight official policy or institutional documents. Evidence was identified through searches conducted in September–October 2026 and analyzed through two-stage coding covering fiscal resources, institutional conversion processes, infrastructure transmission, green-development outcomes, financing leverage, and recurrent boundary conditions. The synthesis shows that fiscal capacity functions as an enabling condition rather than a sufficient determinant of green growth. It identifies fiscal conversion capacity as the institutional mechanism linking available fiscal resources to productive, resilient, environmentally aligned, and socially inclusive assets and services. Sustainable infrastructure emerges as the principal material transmission channel, while innovative financing operates as conditional leverage whose effectiveness depends on project readiness, governance credibility, sustainability standards, and fiscal-risk management. Regional heterogeneity further shapes the strength and direction of these relationships. These findings extend fiscal-decentralization and sustainable-finance debates by shifting analytical attention from resource availability to the quality of institutional conversion. However, the framework is conceptual, relies on qualitative synthesis, and does not establish causal effects. Future research should validate the construct empirically using provincial or district-level panel data, test discriminant and predictive validity, and examine endogeneity, spatial spillovers, and nonlinear regional effects.
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