The Measurement of Local Government Spending Quality with Indicators of Sustainable Local Development in Indonesia

Abstract

Spending Quality becomes an important element in achieving sustainable development in Indonesia today. Through spending quality instruments, can be government control in evaluating the planning and budgeting process does. This study aims to formulate the measurement spending quality of local government and its relation to sustainable development indicators. In this study, the empirical analyses were performed using the Partial Least Squares Structural Equation Models (PLS-SEM), and also supported by Smart-PLS in handling computational work. The findings of this study suggest that the quality of expenditure is formed by five constructs (priority, allocation, time, accountability, and effectiveness), and reflected on fourteen indicators. Indicators of sustainable development is reflected by the construct Effectiveness areas related to basic services (especially education and health), infrastructure, human development and poverty eradication. Effectiveness found indicators that affected quality of spending in the current year (t), the year after (t + 1) and two years after the spending has done (t + 2). Indicators index constituent quality of spending reflects the holistic dimension of planning and budgeting system of regional development, from the planning, implementation and evaluation of performance. Completely indicator of the quality of spending, making the quality index of regional expenditures could potentially be as one of the important indicators in the management of regional development in achieving the goals of sustainable development

Keywords: spending quality, local development, decentralization fiscal, PLS-SEM