Abstract
This study investigates the relationship between Jambi export with gross domestic capital formation, allocation of transfer funds, and private investment, based on the Vector Error Correction Model (VECM). The results show that, both in the short and long term, the gross domestic capital formation, allocation of transfer funds, and private investment can explain changes in Jambi exports. The gross domestic capital formation strongly influences Jambi's export fluctuations compared to other variables. There is a disequilibrium relationship in the short term, and it becomes equilibrium in the long run. Only 69 percent of export changes can be determined in the current period, and the rest is determined in other periods. Likewise, the gross domestic capital formation, only 38 percent, can be determined in the current period, and the rest is determined in other periods. Based on the impulse response function, the impact of export shocks has a large impact on itself. Shocks have a very significant impact and have a long lead to stable levels. Shocks can cause changes in Jambi exports to gross domestic capital formation. Shocks to the formation of gross domestic capital formation require a long time to reach a stable level.
Highlights
Government reform accompanied by openness has become a demand in Indonesia, especially about transparency, accountability, and the authority of financial governance and development financing
69 percent of export changes can be determined in the current period, and the rest is determined in other periods
In the gross domestic capital formation, only 38 percent can be determined in the current period, and the rest is determined in other periods
Summary
Government reform accompanied by openness has become a demand in Indonesia, especially about transparency, accountability, and the authority of financial governance and development financing. That aspect is important to drive the process of switching from a centralized system to a decentralized system in the format of regional autonomy. Regional autonomy is the area's right, authority, and obligation to govern and manage government affairs and local communities' interests by statutory regulations. This autonomy is based on Law of the Republic of Indonesia Number 23 of 2014 concerning Regional Government, and Law of the Republic of Indonesia Number 33 of 2004 concerning Financial Balance between Central and Regional Government. One of its indicators is the increase of financing from the Local Own-source Revenue (PAD) and funding source from the central government. PAD is derived from: a) intensification and extensibility of regional levies in the form of retribution or taxes; b) Exploration of natural resources; c) Capital formation schemes or regional investments through fundraising or attracting investors
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