The Effect of Government Expenditures on Economic Growth in the Province of South Sulawesi

By Arif, Muh; Susilo et al. | Researchers World, July 2017 | Go to article overview

The Effect of Government Expenditures on Economic Growth in the Province of South Sulawesi


Arif, Muh, Susilo, Burhan, Umar, Wahyudi, Tri Setyo, Researchers World


(ProQuest: ... denotes formulae omitted.)

INTRODUCTION:

The benchmarks are important in determining the success of economic development where economic growth represents a real impact on development policies implemented. Economic growth is closely linked to the process of increasing the production of goods and services in the local economy. Some studies argued that the impact of government spending on economic growth is negative or insignificant (Akpan 2005, Laudau, 1983). Donald and Shuanglin, 1993). The economic growth is associated with the allocation of expenditure. The empirical literature suggests that some researchers believe that there is no impact of public spending on economic growth (Gupta et al., 2002). The description of the government spending effect on education, health and infrastructure to economic growth that is different, it is necessary to study how the influence expenditure the government to economic growth, let alone the South Sulawesi government to make education, health and infrastructure as a strategic sector which is the basis of development.

RESEARCH METHODS:

The Scope of Research:

This study discusses the effect of government spending on education, health and infrastructure to economic growth. This research was conducted at 24 (twenty four hour) districts / cities in South Sulawesi province. The details of the districts / cities can be presented in Table 1 as follows:

TYPES AND SOURCES OF DATA :

The data used in this research is secondary data or data that has been collected by others. The data on government spending (for education, health, and infrastructure) and the economic growth data for the abovementioned districts / cities in South Sulawesi during the period of 2009-2012 is studied. Secondary data sources are generally obtained from the Central Statistics Agency (BPS), Financial Management Agency (BPKD), Planning, South Sulawesi, and other institutions in South Sulawesi that are relevant to the data contained in this study, as well as internet sites.

DEFINITION AND MEASUREMENT OF VARIABLES:

The definition and measurement of variables are intended to explain the variables being studied which is explained in Table 2. In other words, these are the guidelines for how to measure a variable.

DATA ANALYSIS METHOD

Model analysis in this study is inferential, the panel data analysis methods. Estimation of the econometric model used in this study Fixed Effect Model (FEM), which is an approach to estimate panel data using dummy variables to see any difference intercept a cross section and time series are caused by ommited variable. Estimating panel data model with the approach used by the method of estimation techniques Generalized Least Square (GLS). The model of the equation is as follows:

...

Wherein:

PER = Economic Growth

PPP = Expenses Education

PPK = Health Expenditure

PPI = Spending On Infrastructure

It = Error Term

-0 = Intercept

1-3 = Coefficient Parameter

I = District Or Cities In Provinces

T = Time Period

RESULTS AND DISCUSSION :

Based on data analysis, using the Fixed Effect Model (FEM), the estimation results obtained by the following equation:

. …

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