Prioritize the allocation of DAU and DAK

Oct 13, 2025 by thesweetdesigns.com 128 views

Effect of General Allocation Funds, Special Allocation Funds, and Others Regional Revenue on Economic Growth in North Sumatra Province

Introduction

Fiscal decentralization has been a widely discussed topic in the field of economics, particularly in the context of developing countries. The policy aims to provide more autonomy to regional governments in managing their financial resources, thereby encouraging economic growth. However, the effectiveness of fiscal decentralization in achieving its goals is still a topic of debate. This study aims to investigate the effect of General Allocation Funds (DAU), Special Allocation Funds (DAK), and other legitimate regional income (LLPDys) on economic growth in North Sumatra Province, with fiscal decentralization as a moderating variable.

Background

Fiscal decentralization is a policy that provides more autonomy to regional governments in managing their financial resources. This policy is expected to encourage economic growth by strengthening regional fiscal capacity to respond to local needs and priorities. However, the effectiveness of fiscal decentralization in achieving its goals is still a topic of debate. In this study, we aim to investigate the effect of DAU, DAK, and LLPDys on economic growth in North Sumatra Province, with fiscal decentralization as a moderating variable.

Methodology

This study used a quantitative approach, with a sample of 23 districts and cities in North Sumatra Province. The data used in this analysis includes the period 2005 to 2010, and the analytical method applied is multiple regression and residual tests to test the effect of moderating variables. The purposive sampling technique was used to select the sample, as it is a suitable method for selecting a sample that is representative of the population.

Results

The results of this study showed that simultaneously, DAU, DAK, and LLPDys had a significant influence on economic growth. However, when viewed partially, only DAU and DAK showed a significant effect, while LLPDys did not have a significant effect on economic growth. Furthermore, fiscal decentralization does not function as a moderating variable that can strengthen or weaken the influence between DAU, DAK, and LLPDys on economic growth.

Discussion

The results of this study suggest that DAU and DAK have a positive effect on economic growth, while LLPDys do not have a significant effect. This can be caused by several factors, including the effectiveness of regional allocation fund management, external factors that affect regional economic growth, and the characteristics of varying areas in North Sumatra Province.

Additional Analysis and Explanation

Fiscal decentralization is a policy that provides more autonomy to regional governments in managing their financial resources. However, in this study, it appears that fiscal decentralization has no expected moderating effects. This can be caused by several factors, including the effectiveness of regional allocation fund management, external factors that affect regional economic growth, and the characteristics of varying areas in North Sumatra Province.

Implications

The results of this study have several implications for policymakers and regional governments. Firstly, DAU and DAK have proven to have a positive effect on economic growth, and therefore, regional governments should prioritize the allocation of these funds to support economic development. Secondly, fiscal decentralization needs to be improved in order to function effectively as a driving force for sustainable economic growth in regencies and cities in North Sumatra Province.

Conclusion

In conclusion, this study aims to investigate the effect of DAU, DAK, and LLPDys on economic growth in North Sumatra Province, with fiscal decentralization as a moderating variable. The results of this study suggest that DAU and DAK have a positive effect on economic growth, while LLPDys do not have a significant effect. Furthermore, fiscal decentralization does not function as a moderating variable that can strengthen or weaken the influence between DAU, DAK, and LLPDys on economic growth.

Recommendations

Based on the results of this study, the following recommendations are made:

Prioritize the allocation of DAU and DAK: Regional governments should prioritize the allocation of DAU and DAK to support economic development.
Improve fiscal decentralization: Fiscal decentralization needs to be improved in order to function effectively as a driving force for sustainable economic growth in regencies and cities in North Sumatra Province.
Enhance regional allocation fund management: Regional governments should enhance their allocation fund management to ensure that the funds are used effectively and efficiently.
Address external factors: Regional governments should address external factors that affect regional economic growth, such as macroeconomic conditions, developing industrial sectors, and central government policies.

Limitations

This study has several limitations, including:

Sample size: The sample size of this study is limited to 23 districts and cities in North Sumatra Province.
Data availability: The data used in this analysis is limited to the period 2005 to 2010.
Methodology: The analytical method applied in this study is multiple regression and residual tests, which may not be suitable for all types of data.

Future Research Directions

Future research directions include:

Investigating the effect of fiscal decentralization on economic growth: Future studies should investigate the effect of fiscal decentralization on economic growth in other regions.
Examining the impact of external factors on regional economic growth: Future studies should examine the impact of external factors on regional economic growth.
Developing a more comprehensive model of regional economic growth: Future studies should develop a more comprehensive model of regional economic growth that takes into account various factors that affect regional economic growth.
Frequently Asked Questions (FAQs) about the Effect of General Allocation Funds, Special Allocation Funds, and Others Regional Revenue on Economic Growth in North Sumatra Province

Q: What is the main objective of this study? A: The main objective of this study is to investigate the effect of General Allocation Funds (DAU), Special Allocation Funds (DAK), and other legitimate regional income (LLPDys) on economic growth in North Sumatra Province, with fiscal decentralization as a moderating variable.

Q: What is fiscal decentralization? A: Fiscal decentralization is a policy that provides more autonomy to regional governments in managing their financial resources, thereby encouraging economic growth.

Q: What are the results of this study? A: The results of this study show that simultaneously, DAU, DAK, and LLPDys have a significant influence on economic growth. However, when viewed partially, only DAU and DAK show a significant effect, while LLPDys do not have a significant effect on economic growth. Furthermore, fiscal decentralization does not function as a moderating variable that can strengthen or weaken the influence between DAU, DAK, and LLPDys on economic growth.

Q: What are the implications of this study? A: The results of this study have several implications for policymakers and regional governments. Firstly, DAU and DAK have proven to have a positive effect on economic growth, and therefore, regional governments should prioritize the allocation of these funds to support economic development. Secondly, fiscal decentralization needs to be improved in order to function effectively as a driving force for sustainable economic growth in regencies and cities in North Sumatra Province.

Q: What are the limitations of this study? A: This study has several limitations, including:

Sample size: The sample size of this study is limited to 23 districts and cities in North Sumatra Province.
Data availability: The data used in this analysis is limited to the period 2005 to 2010.
Methodology: The analytical method applied in this study is multiple regression and residual tests, which may not be suitable for all types of data.

Q: What are the future research directions? A: Future research directions include:

Investigating the effect of fiscal decentralization on economic growth: Future studies should investigate the effect of fiscal decentralization on economic growth in other regions.
Examining the impact of external factors on regional economic growth: Future studies should examine the impact of external factors on regional economic growth.
Developing a more comprehensive model of regional economic growth: Future studies should develop a more comprehensive model of regional economic growth that takes into account various factors that affect regional economic growth.

Q: What are the recommendations of this study? A: Based on the results of this study, the following recommendations are made:

Prioritize the allocation of DAU and DAK: Regional governments should prioritize the allocation of DAU and DAK to support economic development.
Improve fiscal decentralization: Fiscal decentralization needs to be improved in order to function effectively as a driving force for sustainable economic growth in regencies and cities in North Sumatra Province.
Enhance regional allocation fund management: Regional governments should enhance their allocation fund management to ensure that the funds are used effectively and efficiently.
Address external factors: Regional governments should address external factors that affect regional economic growth, such as macroeconomic conditions, developing industrial sectors, and central government policies.

Q: What are the policy implications of this study? A: The policy implications of this study are:

Fiscal decentralization needs to be improved: Fiscal decentralization needs to be improved in order to function effectively as a driving force for sustainable economic growth in regencies and cities in North Sumatra Province.
DAU and DAK should be prioritized: DAU and DAK should be prioritized in the allocation of funds to support economic development.
Regional allocation fund management needs to be enhanced: Regional allocation fund management needs to be enhanced to ensure that the funds are used effectively and efficiently.
External factors need to be addressed: External factors that affect regional economic growth, such as macroeconomic conditions, developing industrial sectors, and central government policies, need to be addressed.