Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia
This paper aims to analyze the influence of local revenues, unconditional grants, and total population on regional expenditure in six provinces in Sulawesi, Indonesia. Panel data covering the period from 2013 to 2023 were analyzed using the fixed effects model (FEM) using the STATA software. The res...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2025-02-01
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| Series: | Public and Municipal Finance |
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| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/21577/PMF_2025_01_Fitrianti.pdf |
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| _version_ | 1832096503248715776 |
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| author | Retno Fitrianti Mirzalina Zaenal Sanusi Fattah Nurul Hidayah |
| author_facet | Retno Fitrianti Mirzalina Zaenal Sanusi Fattah Nurul Hidayah |
| author_sort | Retno Fitrianti |
| collection | DOAJ |
| description | This paper aims to analyze the influence of local revenues, unconditional grants, and total population on regional expenditure in six provinces in Sulawesi, Indonesia. Panel data covering the period from 2013 to 2023 were analyzed using the fixed effects model (FEM) using the STATA software. The results show that local revenue has a significant positive effect on regional expenditure (β = 0.366; p-value 0.000 < 0.05), unconditional grant has a significant positive effect on regional expenditure (β = 0.501; p-value 0.000 < 0.05), and total population has a significant positive effect on regional expenditure (β = 1.207; p-value 0.001 < 0.05). The results show considerable regional disparities, with Southeast Sulawesi and North Sulawesi displaying the highest dependency on central funds, while South Sulawesi exhibits relatively greater fiscal independence. These findings highlight the need for policy reforms to strengthen local revenue generation, minimize reliance on central government transfers, and prioritize investments in infrastructure. Such strategies are crucial for ensuring fiscal sustainability, enhanced local autonomy, and long-term regional growth. |
| format | Article |
| id | doaj-art-2be744dc11b04e3ca428b0b062f47efb |
| institution | Kabale University |
| issn | 2222-1867 2222-1875 |
| language | English |
| publishDate | 2025-02-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Public and Municipal Finance |
| spelling | doaj-art-2be744dc11b04e3ca428b0b062f47efb2025-02-05T14:42:15ZengLLC "CPC "Business Perspectives"Public and Municipal Finance2222-18672222-18752025-02-01141546410.21511/pmf.14(1).2025.0521577Flypaper effect: Analysis of financial transfers from the central government to provincial regions in IndonesiaRetno Fitrianti0https://orcid.org/0000-0002-8206-6980Mirzalina Zaenal1https://orcid.org/0000-0002-9548-783XSanusi Fattah2https://orcid.org/0000-0002-3607-3071Nurul Hidayah3https://orcid.org/0009-0002-1311-6347Dr., Lecturer, Department of Economics, Faculty of Economics and Business, Hasanuddin University, IndonesiaLecturer, Department of Economics, Faculty of Economics and Business, Hasanuddin University, IndonesiaDr., Associate Professor, Department of Economics, Faculty of Economics and Business, Hasanuddin University, IndonesiaLecturer, Department of Economics, Faculty of Economics and Business, Khairun University, IndonesiaThis paper aims to analyze the influence of local revenues, unconditional grants, and total population on regional expenditure in six provinces in Sulawesi, Indonesia. Panel data covering the period from 2013 to 2023 were analyzed using the fixed effects model (FEM) using the STATA software. The results show that local revenue has a significant positive effect on regional expenditure (β = 0.366; p-value 0.000 < 0.05), unconditional grant has a significant positive effect on regional expenditure (β = 0.501; p-value 0.000 < 0.05), and total population has a significant positive effect on regional expenditure (β = 1.207; p-value 0.001 < 0.05). The results show considerable regional disparities, with Southeast Sulawesi and North Sulawesi displaying the highest dependency on central funds, while South Sulawesi exhibits relatively greater fiscal independence. These findings highlight the need for policy reforms to strengthen local revenue generation, minimize reliance on central government transfers, and prioritize investments in infrastructure. Such strategies are crucial for ensuring fiscal sustainability, enhanced local autonomy, and long-term regional growth.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/21577/PMF_2025_01_Fitrianti.pdfflypaper effectlocal revenuesregional expenditurestotal populationunconditional grants |
| spellingShingle | Retno Fitrianti Mirzalina Zaenal Sanusi Fattah Nurul Hidayah Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia Public and Municipal Finance flypaper effect local revenues regional expenditures total population unconditional grants |
| title | Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia |
| title_full | Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia |
| title_fullStr | Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia |
| title_full_unstemmed | Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia |
| title_short | Flypaper effect: Analysis of financial transfers from the central government to provincial regions in Indonesia |
| title_sort | flypaper effect analysis of financial transfers from the central government to provincial regions in indonesia |
| topic | flypaper effect local revenues regional expenditures total population unconditional grants |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/21577/PMF_2025_01_Fitrianti.pdf |
| work_keys_str_mv | AT retnofitrianti flypapereffectanalysisoffinancialtransfersfromthecentralgovernmenttoprovincialregionsinindonesia AT mirzalinazaenal flypapereffectanalysisoffinancialtransfersfromthecentralgovernmenttoprovincialregionsinindonesia AT sanusifattah flypapereffectanalysisoffinancialtransfersfromthecentralgovernmenttoprovincialregionsinindonesia AT nurulhidayah flypapereffectanalysisoffinancialtransfersfromthecentralgovernmenttoprovincialregionsinindonesia |