The Impact of Budget Decentralization on Local Government Performance (Study at Municipal – City Governments in Jambi Province)

Abstract

The Independence of local governments in planning, managing revenues and expenditures is a form of fiscal decentralization in government. Therefore, decentralization is an important factor for regions in managing and allocating resources such as infrastructure investment, as well as services to serve the community in order to encourage regional economic growth and community welfare. The purpose of the study was to examine the direct effect of budget decentralization, economic efficiency, and economic growth on the performance of local governments and the indirect effect of budget decentralization on the performance of city/municipal governments in Jambi through economic growth and economic efficiency. This study uses the Partial Least Square (PLS) analysis technique to analyze the data obtained from the research population consisting of all city/district governments in Jambi. The research data is panel data obtained from secondary data from the Central Statistics Agency for the 2017-2019 period. The conclusion from the data analysis is that budget decentralization, economic efficiency and economic growth have a direct effect on the performance of the city/city government in Jambi and economic growth has a direct effect on the performance of the city/city government in Jambi. We find that budget decentralization has an indirect effect through economic efficiency and economic growth on the performance of municipal/municipal governments in Jambi.

Keywords: Budget Decentralization, Local Government Performance

DOI: 10.7176/EJBM/14-6-01

Publication date:March 31^st 2022