Abstract
The implementation of regional autonomy in Indonesia has lasted almost 18 years. However, the success of regional autonomy has not been optimal. Some researchers discovered the existence of limitation of Regional Government Budget. This study investigates the presence of the degree of regional autonomy and its impact on social welfare using data covering all districts in Indonesia from 2013 to 2016. To test hypotheses, we first group districts based on the degree of regional autonomy and than test the existence of the degree of regional autonmy and its impact on social welfare simultaneously on each of regional autonomy degree. Partial Least Square release 6 is used to test hypotheses. The results show that the fiscal decentralization has a significant effect on capital expenditure in districts’ APBD in Indonesia but has no significant effect on economic growth and social welfare of districts in Indonesia; capital expenditure in districts’ APBD in Indonesia has a significant effect on the economic growth and social welfare of the districts in Indonesia; and economic growth has no significant effect on the social welfare of the districts in Indonesia. The significance of the influence between variables depends on the degree of regional autonomy.
Highlights
According to the Explanation of Law Number 23 Year 2014 concerning Regional Government, it is stated that according to the mandate of the 1945 Constitution of the Republic of Indonesia, the regional government has the authority to regulate and manage government affairs according to the principle of autonomy and co-administration
The description of the degree of regional autonomy shows that generally districts in Indonesia are not independent in carrying out government and development
The path coefficient of 0.121 indicates that the more capital expenditure increases, the more economic growth increases, and vice versa. The results of this test indicate that capital expenditure in districts has a significant effect on the economic growth in districts in Indonesia. This means that even though the large APBD portion for Indirect Expenditures, unproductive capital expenditure, capital expenditure is allocated for long-term investment, budget deviations, so that all of these minimize the role of capital expenditure in districts for the economic growth of districts in Indonesia, but in its development from year to year various conditions have receded
Summary
According to the Explanation of Law Number 23 Year 2014 concerning Regional Government, it is stated that according to the mandate of the 1945 Constitution of the Republic of Indonesia, the regional government has the authority to regulate and manage government affairs according to the principle of autonomy and co-administration. Regional autonomy in Indonesia, which has been running for almost 18 years since January 1, 2001, in reality has not succeeded in fulfilling the objectives of implementing regional autonomy, namely accelerating the realization of public welfare. The failure of the objectives of regional autonomy in improving community welfare is due to the ability of local governments to manage regional finances (Badrudin, Kusuma, & Wardan, 2018 and Badrudin & Kuncorojati, 2017). Research that links the degree of regional autonomy with the success of regional autonomy has not been done much. The research was conducted with the aim of analyzing the successful implementation of regional autonomy in Indonesia based on the degree of regional autonomy
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