The Implications of Local Government Spending Efficiency on the Regional Economic Performance

DOI

10.2991/icied-17.2018.3How to use a DOI?

Keywords

local government; spending; infrastructure; growth

Abstract

Fiscal decentralization is an opportunity as well as a challenge for local government to improve the welfare of society through better economic manifestation. Regional economic performance is still a proud note during the implementation of fiscal decentralization. During 2011-2014, economic growth slowed and decreased by 6.49%, 6.26%, 5.73% and 5.06% respectively. The regional fiscal policy that was reflected in APBD contributed to the slowing economic performance. The increasing trend of regional spending each year does not automatically create better economic performance. APBD management that is pursued by reducing consumer spending, increasing PAD and enlarging capital expenditure allocation encourages the acceleration of regional development. On those matters, this research is aimed to see the influences of government expenditure specifically the efficiency of local government spending on the regional economic performance. The research uses quantitative method by using regression with estimation model of least square. The analysis involves variables of economic growth, regional capital expenditure, administrative expenditures, and the original income of growth areas; the control variables are gross fixed capital formation, population, and Constructive Cost Index. The research uses panel data sourced from APBD realization report in 2011-2015. The results prove that capital expenditure has an influence on regional economic improvement with the elasticity of 0.027. Each 1% increase in capital expenditure will contribute 0.02% to an increase in the economic growth. The original revenue of the region significantly influenced the increase of regional economic growth during the research period with a p-value of 0.027. Quality of spending has a high relation on the economic growth. A high quality spending of a region will be able to boost the economic growth and reduce poverty. Better provision of infrastructure will create inter-regional connectivity to promote local trade. Local governments should increase the accountability, value for money, probity, and transparency of APBD management as an effort to boost the region's economic growth

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Muhammad Heru Akhmadi
AU  - Imam Sumardjoko
PY  - 2017/12
DA  - 2017/12
TI  - The Implications of Local Government Spending Efficiency on the Regional Economic Performance
BT  - Proceedings of the 2nd International Conference on Indonesian Economy and Development (ICIED 2017)
PB  - Atlantis Press
SP  - 11
EP  - 15
SN  - 2352-5398
UR  - https://doi.org/10.2991/icied-17.2018.3
DO  - 10.2991/icied-17.2018.3
ID  - HeruAkhmadi2017/12
ER  -