Friska Rebekka Hutabarat, 7111417049 (2021) THE EFFECT OF FISCAL DECENTRALIZATION ON ECONOMIC GROWTH IN WEST JAVA PROVINCE 2014 – 2020. Under Graduates thesis, UNIVERSITAS NEGERI SEMARANG.

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Abstract

The authority of fiscal decentralization granted by the central government encourages local governments to further develop the potential and creativity that can be produced by their regions. The granting of authority to carry out the main functions of public services from the central government should be able to influence regional revenues and expenditures which can then be used to foster economic growth in the region. The purpose of this study was to determine the effect of fiscal decentralization on economic growth in West Java Province in 2014-2020. The method used is panel data regression analysis with Fixed Effect Model (FEM) approach. The results showed that fiscal decentralization and economic growth showed significant results and had a negative effect. As well as the influence of control variables that have a significant and positive effect on economic growth, such as tax revenue and transfer income. While the variable population growth rate has a negative and significant effect on economic growth. Meanwhile, capital expenditures and labor force participation rates have no significant effect on economic growth. Based on the results of the study, the researchers suggest that local governments are expected to be able to increase sources of regional income and reduce revenue benefits from transfer income, local governments can utilize transfer revenues as optimally as possible and reduce the level of inequality between regions. The government can review which leading sectors need to increase the allocation of funds to increase regional economic growth

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