Determinants of Economic Growth in Special Autonomous Regions: Does Capital Expenditure Matter?

Abstract

This study aims to examine the influence of balancing funds, special
autonomy funds, and regional own-source revenues on economic
growth, with capital expenditure as an intervening variable. A
purposive sampling method was used, selecting three Indonesian
provinces: Aceh, Papua, and West Papua. Data analysis was
conducted using panel data regression and path analysis models.
The results indicate that balancing funds and regional own-source
revenues do not significantly influence capital expenditure, whereas
special autonomy funds have a significant positive effect on capital
expenditure. Additionally, balancing funds, special autonomy
funds, and regional own-source revenues directly have a significant
positive effect on economic growth, while capital expenditure does
not significantly impact economic growth. Path analysis further
reveals that capital expenditure does not mediate the relationship
between balancing funds, special autonomy funds, regional ownsource
revenues, and economic growth.