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THE EFFECT OF FISCAL TRANSFER ON HUMAN DEVELOPMENT INDEX: EVIDENCE FROM SUMATRA AND KALIMANTAN ISLAND
The purpose of this study is to examine how the Human Development Index (HDI) is affected in provinces on the islands of Sumatra and Kalimantan between 2016 and 2024 by General Allocation Funds (GAF), Special Allocation Funds (SAF), with control variables such as average length of schooling, life expectancy, and Gross Regional Domestic Product (GRDP) per capita. Panel data regression with a Common Effects Model (CEM), Fixed Effects Model (FEM), and Random Effects Model (REM) approach were employed in this work to identify the optimal model. To determine the relevance of each variable’s influence, statistical tests and model selection tests are added to the testing. The findings show that not all variables significantly improve HDI. The HDI is positively influenced by the General Allocation Fund, demonstrating how general fiscal transfers contribute to regional human development standards. Special Allocation Funds show a negative impact, suggesting that regional management capabilities have a significant impact on the effectiveness of allocation-based funds. HDI is positively and significantly influenced by the control variables of life expectancy and average length of education, indicating that health and education are important factors in determining progress in human development quality. In addition, improvements in regional economic capacity are associated with improvements in community welfare, as GRDP per capita has a positive impact on HDI. These findings indicate that fiscal transfers and human capital quality play an important role in promoting human development in Sumatra and Kalimantan. Keywords: Human Development Index, General Allocation Fund, Special Allocation Fund, Fiscal Decentralization, Panel Data
FAKULTAS EKONOMI DAN BISNIS ISLAM, UIN SUNAN KALIJAGA YOGYAKARTA
NIM.: 22108010070 Fayi Faizah Azzahra Herlambang
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