EFFICIENCY ANALYSIS OF REGIONAL GOVERNMENT EXPENDITURE ON DEVELOPMENT: EVIDENCE FROM INDONESIA
DOI:
https://doi.org/10.2478/eoik-2025-0058Keywords:
Financial Efficiency, Fiscal Autonomy, Indonesian Democracy, Productivity, Regional Development, Trade OpennessAbstract
Regional governments are expected to be able to focus more on im-
proving the welfare of the community in optimizing government ad-
ministration in each region. This study aims to identify the factors
that influence regional development as indicated by the human devel-
opment index in that region. This study analyzes the efficiency level,
productivity level, trade openness, degree of fiscal autonomy (DFA),
and democracy on regional development in Indonesia during the peri-
od 2016-2020. The effectiveness and efficiency of government budget
functions were evaluated using Data Envelopment Analysis. The re-
search model was evaluated using panel data regression with E-views.
Trade openness and Indonesian Democracy Index have a positive and
insignificant effect on Regional Development. The Degree of Fiscal
Autonomy has a negative and insignificant effect on Regional De-
velopment. Thus, the government needs to focus on the efficiency of
budget use and democracy in its region in order to optimize regional
development. This research also indicates that the level of the Degree
of Fiscal Autonomy in a region must be managed properly. DFA that
is too high can reduce the achievement of regional development in
general. Thus, governments have to pay attention to elevate the degree
of fiscal autonomy given to each region to spur economic growth.
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