Effect of Regional Genuine Revenue and General Allocation Funds on Economic Growth with Regional Expenditures as Intervening Variables (Study On the Regencies/Cities in East Java 2019-2021)

Abstract

Purpose: The objective of this study is to determine the importance of regional expenditure mediation in the correlation between regional original income, general fund allocation, and economic growth.
 Methodology: The study sample is 38 districts or cities within the East Java Province. Employs quantitative research methods and utilizes secondary data collection techniques. The utilized data consists of the actualization of regional own-source revenue, general allocation funds, and expenditure categories, along with the rate of regional gross domestic product based on constant prices. The present study employs the total sampling technique. The research using the SmartPLS 3 software application.
 Findings: Local Own Revenue and General Allocation Funds have a significant effect on Regional Expenditures. Local Own Revenue is found to have a significant influence on Economic Growth, whereas General Allocation Funds do not exhibit a significant impact on Economic Growth. Regional Expenditures have note a direct effect on Growth of economics. Regional Expenditures do not act as a mediator between Regional Original Income and General Allocation Funds with Economic Growth.
 Implications: The research suggests that the government has the opportunity to enhance local economic growth by maximizing local sources of income by prioritizing the allocation of funds from the regional budget and regional development budget in a manner that aligns with effective budget management practices. By doing so, the government can ensure that the desired outcomes are achieved and that there is a positive correlation between budget allocations and actual results.