Fiscal Decentralisation’s Effect on Indonesia Economic Growth

Abstract

This study tries to assess how fiscal decentralization which measured by income, expenditure, population increase, human development, regional investment, open trade influencing local government GDP. Using panel data covering Indonesia’s districts from 2013 to 2023. Fixed-effect method was used to confirm financial decentralization on economic growth on Indonesian districts. Fiscal decentralized as one of the local government budget sources have a positive and significant effect on region economic growth. Furthermore, local government expenditure has strong correlation to local people human resources development, investment, and open trade. The central and local government should process of shifting the budget and expenditure effectively. As regulator, central government need to offer regulation the transfer system design and surveilance the budget distribution. This study contributes to economic and government literature by investigate the role of fiscal decentralisation on Indonesia’s district economic growth based on economic and social indicatior.