The Effect of Local Revenue and Local Expense on Economic Growth (Study In The Regencies and Cities of North Moluccas Province Within 2006-2015)

Abstract

This research’s aim was to know the effect of local revenue and local expense on regencies and cities’ economic growth in North Moluccas. The population was 8 regencies and 2 cities in North Moluccas. The research used panel data from the combination of cross section and time series data. The research results showed that 1) locally generated revenue, general allocation fund, employee’s expense, and goods and services’ expenses were together affect the economic growth, 2) locally generated revenue was significantly affect the economic growth, 3) general allocation fund was significantly affect the economic growth, 4) employee’s expense was significantly affect the economic growth, and 5) goods and services’ expenses was not significantly affect the economic growth. The local government of North Moluccas is suggested to increase the locally generated revenue by increasing the

quality of personnel resources through training and education, and maximize the data and information system of local financial management. The government should empower the regencies and cities of North Moluccas to increase the allocation proportion of goods and capital expenses in APBD, thereby accelerating the availability of public service’s facilities and infrastructure and continue sanctions impositions to the regencies and cities which are late to submit the APBD.