Impact of Fiscal Decentralisation on Economic Growth and Poverty Reduction in Aceh Province, Indonesia

Author:

Firdaus Iqbal1,Nuryartono Nunung2,Barreto Raul3

Affiliation:

1. BPS-Statistics of Lhokseumawe, Aceh Province, Indonesia

2. Department of Economics, IPB University, Bogor, West Java, Indonesia

3. School of Economics, The University of Adelaide, Adelaide, South Australia, Australia

Abstract

This study analyses the impact of fiscal decentralisation policy on economic development and poverty reduction. It focuses on the practice of intergovernmental fiscal transfer and on special autonomy policy in Aceh province, Indonesia, using data from 23 districts gathered from 2008 to 2018. Undertaking a panel data analysis, it will analyse the impact of intergovernmental fiscal transfer from central to local government on local government expenditure. The impact of local government expenditures and fiscal decentralisation practices on local gross domestic product (GDP) and poverty is also measured. The results show that several intergovernmental fiscal transfer policies in Aceh positively enhance the local expenditure. Further, the local government spending and fiscal decentralisation practices in Aceh improve the local GDP and reduce poverty levels in the region.

Publisher

Technoscience Academy

Subject

General Medicine

Reference41 articles.

1. Abrar, M, Juanda, B, Firdaus, M & Hakim, DB 2018, 'The Effect of Special Autonomy Funds on Economic Growth and Income Inequality in Aceh Province', Journal of Applied Economic Sciences, vol. 13, no. 7.

2. Akhsyim, A, Dwi, W & Jaka, S 2017, 'Policies to Eliminate Poverty Rate in Indonesia', International journal of economics and financial issues, vol. 7, no. 1, pp. 435-441.

3. Ali Khan, S 2013, 'Decentralization and Poverty Reduction: A Theoretical Framework for Exploring the Linkages', International review of public administration, vol. 18, no. 2, pp. 145-172.

4. Bachtiar, R 2018, 'Critically Examining the Arrangements of Fiscal Decentralization in Indonesia', Jurnal Transformative, vol. 4, no. 2, pp. 79-92.

5. Besley, T & Coate, S 2003, 'Centralized versus decentralized provision of local public goods: a political economy approach', Journal of Public Economics, vol. 87, no. 12, pp. 2611-2637.

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