An Analysis on Corruption Indication Effect toward Development in East Indonesia Region (Education, Health, and Road Infrastructure Sectors)

Abstract

This research aims to (1) know the effect of corruption indication on public budget in education, health, and road infrastructure sectors, (2) know the effect of corruption indication on public sector service in education, health, and road infrastructure sectors, and (3) know the effect of corruption indication on economic growth in East Indonesia region. The analysis approach used in this research is Path Analysis which is intended to reveal both direct and indirect effects of corruption indication on public budget, public service, and economic growth in East Indonesia region.The result demonstrates that corruption indication has positive effect on public budget, particularly for education and health sectors as perceived from corruption perception index variable. It implies that budget increase is not always followed by higher rate of corruption. The effect of corruption indication does not have significant effect on public budget for education, health, and road infrastructure sectors as perceived from the amount of government loss. There is not government loss potential even the budget for education, health, and road infrastructure sectors raises. The effect of corruption indication influences budget for education, health, and road infrastructure sectors as perceived from positive surplus budget (SiLPA); it indicates corruption potential due to weak budget planning.The increase on education budget in this research is proven to be able to improve public service quality in education sector; meanwhile, the increase on health budget is not yet able to improve public service quality in health sector. This result also demonstrates that an increase on road infrastructure budget is not yet able to improve the availability and quality of road infrastructure service. The increase on education budget is able to improve human resource quality. Greater human resource quality results in higher economic growth. An increase on health budget is proven to negatively influence economic growth. An increase on road infrastructure budget is also confirmed to have non-significant effect on economic growth. It implies that low quality of service on health sector and poor availability and quality of road infrastructure are proven to hinder economic growth.

Keywords: The Effect of Corruption Indication, Public Budget, Public Service, Economic Growth