Governing Transformation from the Periphery: The Role of Sustainable Governance in Shaping Local Economies under National Strategic Projects

Abstract

This study examines the role of sustainable governance in driving local economic transformation in Merauke Regency, Indonesia, within the context of National Strategic Projects (PSN). Using a qualitative case study approach, data were collected through in-depth interviews with key stakeholders, document analysis of regional policies, and field observations. The findings reveal that regional development is significantly influenced by the alignment between national policies and local governance practices. Policy harmonization with PSN has strengthened development direction, particularly in agriculture and food security sectors; however, challenges remain in institutional capacity, coordination, and equitable distribution of economic benefits. The study further shows that while PSN contributes to structural economic changes through the development of leading sectors, the transformation remains partial and uneven across regions and communities.

The integration of Governance Theory, Regional Development Theory, and Local Economic Development (LED) highlights that sustainable governance functions as a key mechanism for aligning national agendas with local needs within a multi-level governance framework. The findings emphasize the importance of adaptive policy strategies, institutional capacity, and cross-sectoral coordination in achieving inclusive and sustainable economic outcomes. Nevertheless, limitations related to the qualitative scope and localized context suggest the need for future research employing broader methodologies and incorporating social and environmental dimensions.