Provincial Government Expenditures Research Articles

Does Fiscal Decentralization Reduce Poverty? An insight from provincial level analysis in Pakistan

The present study has been designed to check the effect of fiscal decentralization (FD) on the poverty levels in Pakistan. Three measures of FD, namely intergovernmental transfers, provincial government revenues, and expenditure, are used in this study. Furthermore, the effect of FD is checked on the poverty levels separately in four provinces of Pakistan. Poverty levels are measured with the help of the Multidimensional Poverty Index (MPI) and the percentage of poor households with a value under 35 according to the International Wealth Index (IWI). This study has used panel data from 1990 to 2020 for the model in which poverty is measured through IWI value. Data from 2004 to 2020 has been used for the model in which poverty is measured through MPI. Feasible Generalized Least Square (FGLS) has been used to obtain the regression results by avoiding the problem of serial correlation and heteroscedasticity. The study's results highlighted that two measures, namely intergovernmental transfers and provincial government expenditures, have a nonlinear relationship with poverty. An increase in intergovernmental transfers and provincial government expenditures reduces poverty at a decreasing rate at first. Then, an increase in both variables results in the form of a higher level of poverty. Moreover, revenue decentralization at the provincial level increases poverty initially and reduces poverty after a critical point.

Reducing the provincial poverty rate in Indonesia: The impact of local government expenditure

This study seeks to examine the effect of local government expenditure on the improvement of provincial welfare in Indonesia. It is necessary to increase public capital such as basic infrastructure and public facilities, as well as to improve public services such as health, education, and social protection. Based on previous studies, research on government spending on poverty has a significant effect on poverty reduction, but some other studies are not the case, namely government spending has not been significant in reducing poverty and improving welfare. The data used in government expenditure is expenditure based on functions, particularly health, education, and social protection functions in the province, both district/city and provincial government expenditures obtained from the Directorate General of Financial Balance (DJPK), while the provincial poverty rate serves as a proxy for regional welfare. Over the period 2015-2021, the Fixed Effect model using the Generalized Least Square Estimation (GLSE) approach is used to estimate outcomes for 34 provinces in Indonesia. The results indicated that government expenditure on the health sector and education sector had a negative significant influence on reducing the poverty rate, whereas government expenditure on social protection did not. The control factors, such as economic growth, had a negative effect on poverty reduction in Indonesia, whereas the unemployment rate and informal labor in the agricultural sector had positive and significant effects. Government policies, especially government spending, have contributed well to reducing poverty, but the government should pay attention to the integration of spending programs with other programs.

What Factors Affect Expenditures of Goods Services For Infrastructure In Indonesia

This study identifies and analyzes the factors that influence infrastructure spending and their impact on regional economic growth in Indonesia. This study is based on cross-sectional data covering 32 provinces in Indonesia with time series 2008-2020 using multiple regression analysis models and simple regression panel data. The results of the study show that the Provincial Minimum Wage, Construction Support Workforce Growth, Regional Own Revenue and Total Provincial Government Expenditure are factors that have a significant influence on the allocation of goods/services expenditure for infrastructure. Meanwhile, the Construction Sector Workforce Growth factor and Gross Regional Domestic Product do not affect the allocation of goods/ services expenditure for infrastructure. The results of the study show that the allocation of goods/services spending for infrastructure has a significant negative effect on economic growth. When infrastructure spending increases by 1 million rupiah, economic growth will decrease by 8.58e-07 or 0.000000858%. While the implications of the results of this study should be that the central and regional governments prioritize spending on goods/services for infrastructure with programs related to reducing poverty and unemployment. Productive infrastructure development and maintaining the quality of work results.

Forecasting Provincial Government Expenditures in Indonesia using Artificial Neural Network

The purpose of this research is to analyze using artificial neural network techniques in predicting the realization of provincial government spending in Indonesia according to the type of expenditure with Back-Propagation. This research needs to be done because it can be seen from the side of realization of provincial government spending in Indonesia that there can be a surplus and a deficit. Therefore, it is necessary to make predictions as an effort to address this. The data comes from the publication by the Central Statistical Agency of the provincial government of financial statistics (BPS). Financial provincial government data was collected through local government financial surveys from provincial government agencies in Indonesia. The analysis process uses the help of Rapidminer software and is validated with K-Fold values from 2 to 10. The data is divided into training data and testing data. Training data is data from 2016-2018 and testing data is data from 2017-2019. Several architectural models were tested namely '3-2-1; 3-5-1; 3-10-1; 3-5-10-1 'to obtain an accurate prediction by considering the value of Root Mean Square Error (RMSE). The results of the back-propagation analysis state that the 3-5-1 model is the best model with an RMSE value of 0.027 at k-fold = 9 for training data and an RMSE value of 0.035 for testing data. These results confirm that the back-propagation algorithm can be implemented in this case.

Analysis of the Effect of Macroeconomic Variables on Happiness in Indonesia

Happiness has become one of the indicators in measuring the level of success of economic development lately. Happiness as an indicator of development success is in line with the new schools of thought in economics, namely economics of happiness and economics of behavior. This happiness indicator is in line with the sustainable development goals driven by the United Nations agency. This study aims to analyze the effect of macroeconomic variables on happiness in Indonesia. The macroeconomic variables are gross regional domestic product per capita, poverty, provincial government expenditures for the education function and for the health function. Happiness data is obtained from the results of a survey of measuring the level of happiness conducted by the Central Statistics Agency which issues a happiness index in 33 provinces in Indonesia. The form of this research is descriptive-quantitative and sourced from secondary data obtained from the publications of the Central Statistics Agency, the Ministry of Education, the Ministry of Health and the National Development Planning Agency. Data analysis uses a panel data regression approach, with serial data in 2014 and 2017 for the number of observations in 33 provinces in Indonesia. The results of the research analysis show: (1) gross regional domestic product per capita has a positive and significant effect on happiness in Indonesia; (2) poverty has a negative and significant effect on happiness in Indonesia; (3) provincial government spending on education function has a positive and significant effect on happiness in Indonesia; (4) provincial government spending on health function has a positive and insignificant effect on happiness in Indonesia. Keywords: Gross Regional Domestic Product per Capita, Poverty, Education Function, .Health Function, Happiness.

Relationship between adaptation to climate change and provincial government expenditure in Pakistan.

Public expenditures on adaptation to climate change have direct effects on budgets of governments. Such direct impacts on government budgetary allocation have been analyzed in the developed countries and very little research is available considering highly vulnerable and exposed developing countries which are facing huge threats of climate change. The current study is designed to bridge this information gap by examining the effects of climate change adaptation on public expenditures in Pakistan employing provincial level data over the period of 1990-2016. Adaptation expenditures included both overall government expenditures and expenditures on communal amenities and housing. In addition to a fixed effects estimation, we employed long difference model to analyze the impact in the long run. Results indicated that variations in temperature and rainfall were significantly related with public expenditures. Short run and long run scenarios showed that rising temperature caused an increase in public expenditures. The effect of rainfall on total public expenditure was positive and statistically significant while rainfall and expenditure incurred on communal amenities and housing were negatively related in the long run. The study posits important policy implications.

Public spending, public governance and economic growth at the Vietnamese provincial level: A disaggregate analysis

This study examines the role of economic governance in the relationship between public spending, private investment, and economic growth in Vietnam at the provincial level. The study data consist of sixty-two Vietnamese provinces for the period 2006–2015. Some notable results are attained by applying a sequential (two-stage) estimation. First, the marginal benefits to economic growth of increased Vietnamese provincial government expenditures may be constrained because of the inefficiency of expenditures on education, business services, and public administration. Second, public spending and private investment are found to be substitutes at the provincial level. Third, based on the Provincial Competitiveness Index (PCI) ranking, used as a proxy for provincial public governance in Vietnam, the significance of public governance can be observed. The study concludes that good governance, characterized by different attributes, such as lower informal charges, greater transparency, and unbiased policy, plays a critical role in improving the impact of government expenditure on economic growth in Vietnamese provinces, particularly through its interactions with private sector investment.

The Analysis of Influence of The Government Expenditure on Poverty in Indonesia

One of the roles of the government in efforts to reduce poverty is through an allocative role in developing effective budget allocation policies that can stimulate economic growth with the ultimate goal of suppressing and reducing poverty. Government expenditure is one of the fundamental government policy tools in efforts to reduce poverty. This research focuses on the effect of government expenditure on poverty in Indonesia. The data used in this study are secondary data including data on the realization of provincial government expenditure in Indonesia, the realization of economic growth that is substituted into the GRDP at the basis of Constant Prices in the provincial government in Indonesia and poverty in proxies in the form of the number of poor people obtained from BPS period in 2014-2018. The data analysis technique which is used in this study is the path analysis technique. Based on the results of the analysis, it can be concluded that in this study government expenditure variables have a significant direct effect on poverty in Indonesia. In addition to direct influence, the results of this study also show that government expenditure variables are indirectly able to influence changes in poverty reduction in Indonesia through economic growth variables

Credit and Fiscal Multipliers in China

We estimate credit and fiscal multipliers in China, using subnational political cycles as a source of exogenous variation. The tenure of the provincial party secretary, interacted with the credit and fiscal expenditure used in other provinces, instruments for provincial credit and government expenditure growth. We find a fiscal multiplier of 0.75 in 2001-2008, which increased to 1.2 in 2010-2015, consistent with higher multipliers in a slower economy. At the same time, a credit multiplier of 0.2 in 2001-2008 declined to close to zero in 2010-2015, consistent with credit saturation and credit misallocation. Our results suggest that credit expansion cannot further support economic growth in China. The flip side is that lower credit growth is also unlikely to disrupt output growth. Fiscal policy is powerful, and can cushion the macroeconomic adjustment to lower credit intensity.

KONVERGENSI PENERIMAAN DAN PENGELUARAN PEMERINTAH PROVINSI DI INDONESIA:

The study analyse sigma and beta convergence of provincial government revenues and expenditures in Indonesia (APBD) by using panel data 30 provinces over the period 2000-2012. The variables used in this study consists of real income per capita and the revenues and expenditures variables in the APBD. The study also included a spatial weights matrix to analyse dependency among provinces. Spatial weights matrix used consists of two types of weights, the real income per capita and the geographical distance. Testing for the presence of spatial dependency performed using Moran's I. The model used in this study are spatial autoreregressive model (SAM) and the spatial error model (SEM). The models are estimated using panel least squares, fixed effects, random effects, as well as both GMM first difference (GMM-DIFF) and system GMM (GMM-SYS). Based on sigma convergence approach, the results of the study showed that during the period of 2000-2012 occurred convergence on total revenue, income, tax, fund balance, total spending, employee spending, and goods spending, but not for the real income per capita. Estimation with beta convergence approach conducted on four variables as each sample (in per capita value), namely: total income, tax, total spending, and goods spending. Estimation with beta convergence is done by using additional explanatory variables which include: economic growth, the degree of openness, as well as economic growth. Based on the beta convergence approach, the study results indicate the occurrence of convergence on total income, tax, total spending, and goods spending. Estimates also lead to the conclusion that there are spatial dependencies between provinces either use distance and income per capita weight.

Credit and Fiscal Multipliers in China

We jointly estimate credit and fiscal multipliers in China. We use the tenure of the provincial party secretary, interacted with the type of stimulus used in other provinces, to obtain separate instruments for provincial credit and government expenditure. We estimate a fiscal multiplier of 0.8 and a credit multiplier of 0.2 in 2001-2015. The multipliers have changed over time. The fiscal multiplier has increased from 0.75 in 2001-2008 to 1.4 in 2010-2015. The credit multiplier has declined from 0.17 to zero over the same periods. Our results suggest that reducing credit growth in China is unlikely to disrupt output growth, whereas fiscal policy may be effective in supporting macroeconomic adjustment.

The Impact of Globalization on Subnational Expenditures: Efficiency and Compensation Effects

The aim of this paper is to study the effects of economic openness and globalization on the structure of provincial government expenditures in Argentina. In particular, we are interested in the effects on social expenditures and its components, as an expression of the welfare state. Much of the existing literature has examined this relationship at the country level. This work contributes to this literature by extending analysis to the subnational sector. A dynamic panel data model is estimated using GMM – both in Differences and in Systems for the 24 jurisdictions of Argentina (23 provinces and the city of Buenos Aires) over the period 1993-2010. The paper includes a measure of globalization adapted from the KOF index proposed by Dreher (2006) which is estimated at the level of sub-national governments. Results indicate that economic openness and globalization have a negative impact on the participation of social expenditures. This is the expected result taking into account the “efficiency” effect versus the “compensation” effect.

KONVERGENSI PENERIMAAN DAN PENGELUARAN PEMERINTAH PROVINSI DI INDONESIA: PENDEKATAN DATA PANEL DINAMIS SPASIAL

The study analyse sigma and beta convergence of provincial government revenues and expenditures in Indonesia (APBD) by using panel data 30 provinces over the period 2000-2012. The variables used in this study consists of real income per capita and the revenues and expenditures variables in the APBD. The study also included a spatial weights matrix to analyse dependency among provinces. Spatial weights matrix used consists of two types of weights, the real income per capita and the geographical distance. Testing for the presence of spatial dependency performed using Moran’s I. The model used in this study are spatial autoregressive model (SAM) and the spatial error model (SEM). The models are estimated using panel least squares, fixed effects, random effects, as well as both GMM first difference (GMM-DIFF) and system GMM (GMM-SYS). Based on sigma convergence approach, the results of the study showed that during the period of 2000-2012 occurred convergence on total revenue, income, tax, fund balance, total spending, employee spending, and goods spending, but not for the real income per capita. Estimation with beta convergence approach conducted on four variables as each sample (in per capita value), namely: total income, tax, total spending, and goods spending. Estimation with beta convergence is done by using additional explanatory variables which include: economic growth, the degree of openness, as well as economic growth. Based on the beta convergence approach, the study results indicate the occurrence of convergence on total income, tax, total spending, and goods spending. Estimates also lead to the conclusion that there are spatial dependencies between provinces either use distance and income per capita weight. Keywords: Sigma and Beta convergence, spatial weights, panel data, revenue and expenditure, the provincial budget (APBD)JEL Classification: H7,R1

Government Size and Economic Growth in Vietnam: A Panel Analysis

The effect of government relative size on economic growth is a contentious issue. This paper is undertaken to test the relationship between government size and economic growth in Vietnam. The study is a panel data investigation, involving 60 provinces over the period 1997–2012. Various measures of government size are defined: provincial government expenditure as a share of gross provincial product (GPP), provincial government revenue as a share of GPP, real provincial government expenditure per capita, and real provincial government revenue per capita. Empirical estimates are employed by conducting Difference Generalized Method of Moments method proposed by Arellano and Bond (1991) and Pooled Mean-Group method by Pesaran, et al. (1999). These tests reveal: (i) provincial government expenditure (revenue) as a share of GPP has a significantly negative effect on economic growth; and (ii) the real government expenditure (revenue) per capita has a significantly positive effect on economic growth. It is also found that the long-run and short-run coefficients of government expenditure size are significant and negative, that the correction mechanism from the short run disequilibrium to the long run equilibrium is not convergent, and that government employment has a negative correlation with economic growth.

Government Size and Economic Growth in Vietnam: A Panel Analysis

This paper investigates the effect of provincial government size on economic growth using the panel data of 60 provinces over the period of 1997-2012. Empirical estimates are employed by conducting Difference Generalized Method of Moments (GMM) method proposed by Arellano and Bond (1991) and Pooled Mean-Group method of Pesaran, Shin et al. (1999). We use respectively various measures, defining the size of government, namely provincial government expenditure’s share to gross provincial product (GPP), provincial government revenue’s share to GPP, real provincial government expenditure per capita, and real provincial government revenue per capita. Our findings show that the increase in government expenditure’s share and government revenue’s share slow economic growth, while the real government expenditure per capita and real government revenue per capita have positive relationship with economic growth. The latter results indicate that provinces with high economic potential have advantages not only of raising budget revenue per capita but also providing their people with more and better public services. We also find that the long run and short run coefficient of government expenditure’s share are negative; the correction mechanism from the short run disequilibrium to the long run equilibrium is not convergent; and government employment has negative related to growth of per capita. From a policy perspective, our findings do not advocate a large government size, which is detrimental to economic growth. A small government size is the essential issue and could be effective in providing public services for economic growth as well as for preventing market failures.

Government Size and Economic Growth in Vietnam: A Panel Analysis

This paper investigates the effect of provincial government size on economic growth using the panel data of 60 provinces over the period of 1997-2012. Empirical estimates are employed by conducting Difference Generalized Method of Moments (GMM) method proposed by Arellano and Bond (1991) and Pooled Mean-Group method of Pesaran, Shin et al. (1999). We use respectively various measures, defining the size of government, namely provincial government expenditure’s share to gross provincial product (GPP), provincial government revenue’s share to GPP, real provincial government expenditure per capita, and real provincial government revenue per capita. Our findings show that the increase in government expenditure’s share and government revenue’s share slow economic growth, while the real government expenditure per capita and real government revenue per capita have positive relationship with economic growth. The latter results indicate that provinces with high economic potential have advantages not only of raising budget revenue per capita but also providing their people with more and better public services. We also find that the long run and short run coefficient of government expenditure’s share are negative; the correction mechanism from the short run disequilibrium to the long run equilibrium is not convergent; and government employment has negative related to growth of per capita. From a policy perspective, our findings do not advocate a large government size, which is detrimental to economic growth. A small government size is the essential issue and could be effective in providing public services for economic growth as well as for preventing market failures.

Regional Health Accounts for Pakistan—Provincial and District Health Expenditures and the Degree of Districts Fiscal Autonomy on Health.

Since May 2009 the first National Health Accounts (NHA) for Pakistan have been finalised and published by Federal Bureau of Statistics (FBS) in cooperation with German Technical Cooperation (GTZ). This paper goes one step ahead the report and analyses in more detail the regional differences in health expenditure structures in Pakistan. The further analyses can be divided into four parts: health expenditures in provinces (Provincial Health Accounts, PHA),2 Punjab provincial and district governments health expenditures and its comparison with ADB figures, all districts of Pakistan and comparison between total district government and provincial government expenditure for each province; the latter calculation is applied as indication for the degree of fiscal autonomy of the districts in each province. Consequently we first analyse the provincial health expenditures by Financial Agents and compare them between the provinces which leads to very heterogeneous results (Section 2); the per capita health expenditures differ from 16 to 23 USD. Secondly, we compare NHA results on Punjab district government with available ADB results and present differences in methods as possible reasons for different results (Section 3). Third, we analyse district data of all district governments in all four Pakistani provinces on the level of detailed function codes in Section 4; the aim is to discover regional differences between districts of the same as well as of different provinces. Fourth, we analyse in Section 5 the degree of fiscal autonomy on health of the districts in each province; therefore we review the ordinance description and compare total district government with total provincial government expenditures per province. Finally we give recommendations for future rounds of NHA in Pakistan regarding formats and necessities of detailed health expenditure data collection to ensure evidence based decision-making not only on federal, but also on provincial and district level. JEL classification: H51, I1, O18, R1 Keywords: National Health Accounts, Health Expenditures, Regional Comparison, Regional Accounts, Fiscal Autonomy, Pakistan

The Limits of Liberalism in Argentine Provinces 1890-1940: An Analysis of Provincial Expenditures

This paper examines the liberal grounded provincial societies of Argentina from 1890 to 1940. A close examination of provincial government expenditures reveals that these states spent most of their revenues on law and order and education with little being directed to social welfare and to health. This form of government was extremely limited, therefore, in providing for the welfare of most of its citizens, and left many of them excluded from full participation in the political, economic and social life of the nation. The type of liberalism espoused by the Argentine elites effectively undermined the very project of state building that they espoused and resulted in the Peronist revolution of the 1940s when the state, under the slogan of social justice, became much more interventionist in the areas of welfare, health and housing, and much more inclusionist with regard to the Argentine people as a whole. The liberal state, and this includes the provinces, became a victim of its own chosen limitations.

Does Health-Care Spending Crowd out Other Provincial Government Expenditures?

Health spending, the largest component of provincial government spending, has risen significantly over the past decade. It has been asserted that larger health expenditures have caused provincial governments to spend less on other types of government services. Using a panel of province-level data for the period 1988/89 to 2003/04, this study provides a test of the hypothesis that health spending has crowded out other types of spending. The results indicate that, for the period studied, there is no evidence that increased provincial government health expenditures resulted in lower levels of spending on other categories of government provided goods and services.

Fiscal decentralization, collusion and government size in China's transitional economy

This paper examines the public sector in China's transitional economy, with the aim of testing the validity of a variety of hypotheses, namely the Brennan and Buchanan (1980, The Power to Tax: Analytical Foundations of a Fiscal Constitution, CUP, Cambridge); Oates–Wallis (1985, American Economic Review, 75(4) 748–57) version of the decentralization hypothesis and the Brennan and Buchanan collusion hypothesis, on the impact of fiscal decentralization at the provincial level. Pooled cross-section (province) and time-series data are employed with the period under consideration being 1986–1998. An error components technique is also used for the empirical testing. The empirical results provide evidence to support both the Oates–Wallis hypothesis and the collusion hypothesis that an increase in fiscal decentralization leads to a higher level of provincial government expenditure. The study also finds that the central and provincial governments are provided with an incentive to form collusive agreements through extra-budgetary funds.