Abstract
This study aims to analyze the hump-shaped relation of regions in East Java Province. The proof of hump-shaped relation is seen from the influence of the degree of fiscal decentralization on economic growth. Fiscal decentralization analysis which is the ratio of regional original income and total regional expenditure, as well as using control variables consisting of government investment, and education which is implemented with reading and writing ability figures. The method used in this research is the econometrics approach. The model used in this study is the Fixed Effect Model with the Generalized Least Square method. The results of this study indicate that together the degree of decentralization, the degree of quadratic fiscal decentralization, government investment, the Gini ratio, the Gini squared ratio, and education significantly influence the regional economic growth in East Java Province. Partially the degree of decentralization, the degree of decentralized fiscal squared, government investment, the Gini ratio, the quadratic Gini ratio, and education also significantly affect economic growth, and show a hump-shape relationship, namely the degree of fiscal decentralization has a positive effect and quadratic fiscal decentralization hurts economic growth.
Highlights
Slowing economic growth in the area of East Java Province has the same tendency with economic growth at the national level
The central government assists to develop the potential of the region through allocation funds, for the remainder is the responsibility of local governments
The researcher is interested in further studying how the influence of the degree of fiscal decentralization on economic growth, whether there is a hump-shaped relationship at the regional level, as well as looking at the influence of other factors including investment, Gini index, and reading and writing ability figures on regional economic growth in East Java Province in 2015 to 2019
Summary
Slowing economic growth in the area of East Java Province has the same tendency with economic growth at the national level. The researcher is interested in further studying how the influence of the degree of fiscal decentralization on economic growth, whether there is a hump-shaped relationship at the regional level, as well as looking at the influence of other factors including investment, Gini index, and reading and writing ability figures on regional economic growth in East Java Province in 2015 to 2019.
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