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Journal : UNEJ e-Proceeding

THE ANALYSIS OF LOCAL GOVERNMENT EXPENDITURE EFFICIENCY AND ITS IMPACT ON ECONOMIC GROWTH IN INDONESIA Faisol Faisol
UNEJ e-Proceeding the 3rd International Conference on Economics, Business, and Accounting Studies
Publisher : UPT Penerbitan Universitas Jember

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Abstract

The instrument of decentralization in Indonesia is expected to be able to improve efficiency of public expenditure and further drive economic growth in the regions. However, regional economic growth after the decentralization is still lower than that of before the policy enactment in Indonesia. This raised question whether or not the public expenditure have been efficient after the decentralization and whether or not this efficiency makes positive influences on the economic growth. This research studies correlation between the public expenditure efficiency and the economic growth in East Java and Central Java. The object of this research is public expenditure regencies / cities in East Java and Central Java. The public expenditure in East Java consists of 29 regencies and 9 cities. The public expenditure in Central Java consists of 29 regencies and 6 cities. The data source is pooled data from 2011 to 2016. The analysis is divided into two stages. First, public expenditure efficiency is measured by using Stochastic Frontier Analysis (SFA) method. The selection of inputs and outputs in this research is based on public expenditures’ functions. In the second stage, regression analysis is conducted to examine the impacts of the public expenditures’ efficiency scores and other determinants on the regional economic growth. The research result shows that, in East Java and Central Java, the public expenditure efficiency scores have positive and significant correlation with the economic growth in the region. Hence, the bigger the efficiency scores of the regional expenditure, the higher the economic growth in the region.
HUMAN CAPITAL INVESTMENT ON INDUSTRIAL PRODUCTIVITY IN INDONESIA Faisol -; Suhardi -
UNEJ e-Proceeding the 3rd International Conference on Economics, Business, and Accounting Studies
Publisher : UPT Penerbitan Universitas Jember

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Abstract

The manufacturing industry is the largest sector in contributing to GDP in Indonesia. In the last four years showed that although the amount of output of manufacturing industry sector from year to year tends to increase, but the problem when viewed from the empirical data percentage of growth in the contribution of the manufacturing sector in Indonesia tend to be decreased. In long term is expected to increase the effectiveness of human resources, which in turn will lead to greater corporate performance is good performance of financial and non-financial performance, all of which will increase the gross domestic product as a measured key in rising per capita income of a country. The aim of this study is to test empirically the impact of human capital investment that is interpreted by education level and other variables both short and long term to productivity of Manufacturing Industry in Indonesia. This research data is secondary data published by World Bank and International Financial Statistic (IFS) for the period 1984-2014. The analyze method is using the Engle-Granger approach Co-integration and Error Correction Model (ECM). The first Stage test is Stationer test. The Co-integration test and ECM Test From the estimation results indicate that the relationship between Human Capital to the growth of manufacturing industry value added (IMVA). In the estimation equation of short-term and long-term human capital in the proxy with the level of education at the primary level (Pri) and secondary level (Sec) significant positive effect on the growth of value-added manufacturing industry in Indonesia. The long-term equation estimation results also show that the gross capital formation (GCF), labor force (LBF), enrollment in primary (Pri), and enrollment in secondary (Sec) variables have a positive effect on the productivity of Indonesia's manufacturing industry as reflected by Value added industrial manufacturing (IMVA). While the enrollment in tertiary and GDP variables have no significant effect on IMVA in the long term