Kualitas Pemerintahan Daerah dan Pertumbuhan Ekonomi Inklusif di Jawa Timur

Abstract

The phenomenon of rapid economic growth but also increasing income inequality, need a new paradigm in policymaking that promotes inclusive growth. The change in development paradigm requires a quality of government. Therefore, this study aims to analyze the effect of the local government quality on inclusive growth in all districts/cities in East Java Province. Fiscal conditions and regional financial performance measure the quality of government. Meanwhile, inclusive growth is measured by the BAPPENAS inclusive development index. By using panel data regression analysis, the estimation results show that the fiscal conditions and regional financial performance have a significant and positive effect on inclusive economic growth in the regions.

Regional Financial Performance and Inclusive Economic Development: Empirical Evidence From Provinces in Indonesia

“…The RDF variable has a positive coefficient, indicating that if regional decentralization increases, the inclusiveness of economic growth will also increase. This is in accordance with the findings of Sudiarta and Utama (2019) and Prasetyia (2021).…”

“…When capital expenditure issued by regional governments is higher, the inclusiveness of economic growth in that region tends to be lower. This is in line with the findings by Prasetyia (2021) which stated that capital expenditure had a negative impact on the inclusiveness of economic growth in East Java Province. These findings indicate that economic growth in Indonesia is still exclusive because capital expenditure management is still less than optimal.…”

“…This indicates that there is still a high level of regional dependence on funds from outside local original income, such as transfers to regions and village funds (TKDD) and other income. However, these results are different from the findings by Nurhemi & Suryani (2015); Sudiarta and Utama (2019); and Prasetyia (2021) which states that the regional fiscal independence ratio has a positive influence on the inclusiveness of economic growth. On the other hand, Mafaza (2022) found that fiscal decentralization and regional fiscal independence do not have a significant influence on the inclusiveness of economic development.…”

“…Current research in various countries is still limited in looking at the relationship between regional financial performance and inclusive economic growth. With the same topic in Indonesia, the relationship is still under debate and is only limited to certain provinces, namely Sudiarta and Utama (2019) in Bali; Prasetyia (2021) in East Java; and Mafaza (2022) in Central Java. Sudiarta and Utama (2019) and Prasetyia (2021) states that good regional financial performance is able to accelerate the inclusiveness of regional economic growth.…”

“…With the same topic in Indonesia, the relationship is still under debate and is only limited to certain provinces, namely Sudiarta and Utama (2019) in Bali; Prasetyia (2021) in East Java; and Mafaza (2022) in Central Java. Sudiarta and Utama (2019) and Prasetyia (2021) states that good regional financial performance is able to accelerate the inclusiveness of regional economic growth. In contrast, Mafaza (2022) states that regional financial performance has no impact on the inclusiveness of economic growth.…”