Education Mediates the Nexus between Fiscal Decentralization and Economic Growth: Evidence from Indonesia

Taufik Syahzaeni (), Abdul Razak Munir (), Andi Aswan (), Arifuddin Arifuddin () and Khusaini Khusaini ()
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Taufik Syahzaeni: Universitas Hasanuddin, Makassar, Indonesia
Abdul Razak Munir: Universitas Hasanuddin, Makassar, Indonesia
Andi Aswan: Universitas Hasanuddin, Makassar, Indonesia
Arifuddin Arifuddin: Universitas Hasanuddin, Makassar, Indonesia
Khusaini Khusaini: Universitas Islam Syekh-Yusuf, Tangerang, Indonesia

Economic Research Guardian, 2025, vol. 15, issue 1, 2-26

Abstract: For a decade, global, national, and regional economic growth has shown a downward trend, resulting in low job creation, increasing income inequality, and decreasing social welfare. Studies related to the direct and indirect impact of fiscal decentralization on economic growth remain debatable. This study aims to assess the long-term effect of fiscal decentralization mediated by education on economic growth in Banten, Indonesia. We utilized data for the periods of 2010–2022 from eight regencies and municipalities in Banten Province. By using panel FMOLS, the current study showed that fiscal decentralization contributed to the long-term advancement of education and economic growth. This study also found that education mediated the impact of fiscal decentralization on boosting economic growth in Banten in the long term. These results suggest that local governments further improve budget management quality, both from transfer funds and regional revenue, to ensure that budget use is in line with its targetc.

Keywords: Economic growth; Education; Fiscal decentralization; Investment (search for similar items in EconPapers)
JEL-codes: I21 I25 O23 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:15:y:2025:i:1:p:2-26

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