The Effect of Revenue Sharing Fund on Economic Growth and Income Disparity (Case Study of District / City in East Kalimantan Province)

Maryunani ,Candra Fajri Ananda ,Moh Khusaini ,Yunus Sading

doi:10.7176/jesd/10-14-14

Abstract

This study aims to examine, test and analyzing empirically: (1) direct effect of revenue sharing fund on expenditure structure; (2) direct and indirect effect of revenue sharing fund on income disparity and economic growth; (3) direct effect of expenditure structure on income disparities; and (4) direct and indirect effect of expenditure structure on economic growth. This study used pooled-data of 14 district / city in East Kalimantan Province for 2004-2011 periods. The analysis model used is Structural Modelling Analysis. The study results show that: (1) revenue sharing fund (DBH) directly have a negative and significant effect on expenditure structure; (2) revenue sharing fund (DBH) have a direct negative and indirect positive effect on income disparities and negative but insignificant on economic growth; (3) expenditure structure has a direct negative effect on income disparity and positive but insignificant effect on economic growth; (4) income disparity has a significant and positive effect on economic growth. Keywords : revenue sharing fund, expenditure structure, economic growth, income disparity. DOI: 10.7176/JESD/10-14-14 Publication date: July 31 st 2020

Highlights

There are various implications the implementation of Local Autonomy based on Law Number Year 2004 on Local Government and Law Number Year 2004 on Fiscal Balance between the Central and Local Governments, to put districts / cities as the focus of local autonomy
Hypothesis testing is done on structural model completely and classified by forming several sub-structures of model to describe the relationship between variables to measure the direct and indirect effects
Overall structure model is divided into 3 sub-structures and each sub-structure consists of 1 model

Summary

Introduction

There are various implications the implementation of Local Autonomy based on Law Number Year 2004 on Local Government and Law Number Year 2004 on Fiscal Balance between the Central and Local Governments, to put districts / cities as the focus of local autonomy. The district / city are faces the problem of autonomy related to decentralization for authority implementation of government and development, and faces the problem of decentralization in development financing. Implementation of district / city development planning in local autonomy era should accommodate various weaknesses of planning approach of previous era of centralization, by involving all components of community development. Consequences of financing need public participation, ability of local government apparatus, availability of infrastructure to support more local income to improve development financing optimally. The matching grant policy to regions is aimed to strengthen the local fiscal conditions and reducing local imbalances (horizontal imbalances) while at same time reducing the vertical imbalances between the center and regions

Objectives

Results

Discussion

Conclusion