Increasing the Fiscal Capacity and Human Development of East Java: What Should a Regional Government Do?

Mohamad Khusaini

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Increasing the Fiscal Capacity and Human Development of East Java: What Should a Regional Government Do?

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Mohamad Khusaini

2020 Review of Integrative Business and Economics Research Vol. 9 Issue 4 Article Cited by 0 SDG 8SDG 16SDG 11

Abstract

This study aims to analyze the effect of economic growth on local government revenues and human development in East Java. The variables used in this study are economic growth (an exogenous variable), local government revenues (an intervening variable measured by fiscal capacity), and human development (an endogenous variable measured by the human development index). This study uses panel data of regencies and cities in East Java over the period of 2012 to 2016. Based on a path analysis, this study finds that economic growth has a significantly positive effect on fiscal capacity. Moreover, economic growth has a significantly positive indirect effect on the human development index, while its direct effect on the human development index is statistically insignificant. Copyright © 2020 GMP Press and Printing.

Affiliations

Department of Economics, Faculty of Economics and Business, Universitas Brawijaya, Indonesia

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