Does government spending really contribute to development? Evidence from Indonesia

Sutaryo Sutaryo, Taufiq Arifin, Muhtar Muhtar and Ekwanto Ekwanto

International Journal of Monetary Economics and Finance, 2025, vol. 18, issue 5, 299-315

Abstract: The implementation of decentralisation in Indonesia still invites public concern about local development, especially in realising the outcomes of government spending, that marks the urgency for a comprehensive study in this field. This study aims to comprehensively investigate the impact of government spending on development outcomes. Our study utilises secondary data from the authorised government institutions in Indonesia during 2015-2021 fiscal period, analysed with multiple regression analysis. We report that the development across Indonesia still experiences significant issues that requires urgent improvement. Overall, we find that government spending exhibits positive effect on development. Based on our findings, we suggest the government to improve the quality of the spending so that the spending realisation can be translated into the desired development outcomes to push the development towards a developed country. It is important to keep improving the management of the spending from the budget planning, realisation, until accountability evaluation.

Keywords: Indonesia; local government; decentralisation; government spending; development. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:18:y:2025:i:5:p:299-315

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