Regional Fiscal Dynamics and Income Disparity: Cross-Provincial Evidence from Sulawesi

Sri Undai Nurbayani () and Rusda Rusda
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Sri Undai Nurbayani: Hasanuddin University
Rusda Rusda: Hasanuddin University

A chapter in Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), 2026, pp 2344-2353 from Springer

Abstract: Abstract Regional income inequality in Indonesia remains a persistent structural challenge in achieving inclusive and sustainable development. Despite Sulawesi Island’s robust economic growth in recent years, substantial disparities in in-come distribution continue to exist across its provinces. This study investigates the role of regional fiscal dynamics—specifically Intergovernmental Fiscal Transfers (IFT) and Regional Public Investment (RPI) —in reducing the Income Inequality across six provinces in Sulawesi. Utilizing a path analysis approach, the findings reveal that Regional Public Investment exerts a direct, negative, and statistically significant effect on income inequality. In contrast, Intergovernmental Fiscal Transfers do not have a direct impact, but demonstrate a significant indirect effect mediated through regional economic growth. These results underscore the critical need to enhance the effective-ness of regional public investment and strengthen intergovernmental fiscal capacity. Improving fiscal coordination and investment targeting is essential to support sustainable, inclusive, and regionally balanced development strategies across Sulawesi and other economically diverse regions in Indonesia.

Keywords: Intergovernmental Fiscal Transfers; Regional Public Investment; Path Analysis (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-709-5_164

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DOI: 10.2991/978-94-6239-709-5_164

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