The Effect of GRDP and Regional Fiscal independence on Community Welfare
Venti Eka Satya

Center for Research Expert Body, Dewan Perwakilan Rakyat Republik Indonesia

Abstract

The fundamental purpose of government is to maintain basic security and public order so that individuals can find happiness. The main factor determining the happiness of society is the level of welfare. Fiscal independence shows the ability of regions to generate revenue to finance their expenses and Gross Regional Domestic Product (GRDP) shows the economic performance and development of a region. This study aims to determine the effectiveness of income and economic activities of local governments for the society welfare. This study examines the effect of fiscal independence and the economic performance of the provincial government on the level of public welfare in 2017-2021. The independent variable in this study is the index of fiscal independence (IKF) and GRDP, while the dependent variable is the level of public welfare that is proxied by the Human Development Index (HDI). The data of this study was obtained from the report on the results of the review of regional fiscal independence by the BPK and the BPS website. Data analysis used quantitative data by regression analysis. The results showed that IKF and GRDP had no significant effect on HDI. Thus, it can be concluded that the income and economic growth of the province have not been on target and have not been directed to improve the welfare of the community.

Keywords: Gross Domestic Regional Product, Fiscal Independence, Community Welfare, Human Development Index

Topic: Business and Economic