Economics and Business
ISSN 2775-9237 (Online)
Published: 03 February 2020
Building Acceleration of Economic Growth Model Through Education and Health Budget Allocation: Cases in Indonesia
Hasyim, Rina Anindita, Baharudin, Gunawan
Esa Unggul University (Indonesia), STIE AMKOP (Indonesia)
Download Full-Text Pdf
Keywords: Education Budget Allocation, Human Development Index, Economic Growth, Developing Countries
The Role of Capital Expenditure on Education, Health Expenditure, on the effort to reduce poverty level is an interesting study because the allocation of expenditure to several countries including Indonesia is quite large, so it is necessary to review the effectiveness of the budget allocation to reduce poverty and increase human economic growth (Psacharopoulus, 1972) in Todaro, 2000). The level of public welfare can no longer be measured from monetary values such as income per capita, but should include non-economic measures (Connolly and Munro (1999); Perkins (2001); Todaro and Smith (2002); and Van Den Berg 2005), and more focus on human development which can be measured from the high government commitment in allocating budget for education, health and other factors which are strongly related to the development of human resources. The objectives of this research are to analyze and assess on how: (i) the impact of the allocation of education capital expenditure and the allocation of health expenditure on the Human Development Index; (2) the influence of human development index on economic growth; (3) the effect of economic growth on the level of poverty; and (4) the interpretation of the economic growth acceleration model. The research was conducted by taking samples in 23 regencies/municipalities in South Sulawesi Province which is one of the provinces with the highest economic growth rate in Indonesia. The data used is Panel data with period 2004 - 2016, then processed by using regression analysis method. The Result of the Research from the first model., it shows that from the t test, it is found that the variables contained in the data which give significant effect to the Human Development Index is the allocation of Education fund, at the real level of 5%. The value of R2 generated in this model is 0.637 which means that 63.7% of the human development index in 23 urban districts for 10 years is explained by the variables in the model, the allocation of education and health funds, the rest by other variables in the model. The variables in the allocation of education funds have a negative influence on the human development index. The value of regression coefficient of this variable is 0.72 with p-value of 0.003. meaning that any 1% increase in health allocation funds will reduce the human development index by 0.72. For the panel data analysis with this random effect model there are individual and time effects that show differences in human development indexes between districts and municipalities and between years. So the value of constants to be obtained will be different for each district/municipality and different for each time. The determinant coefficient value generated in model 1 shows the figure of 0.637 means that 63.7% of the human development index is explained by the variables in the model, i.e. the allocation of education and health funds. In model 2 it was found that the value of determinant coefficient is 0.0854, which means that only 8.5% of the diversity of economic growth in the twenty three districts/municipalities in South Sulawesi in the period 2007-2016 explained by the variables on the human development index.
- Adams, Richard H. Jr, 2003. Economic Growth, Inequality, and Poverty: Finding from a New Data Set, Policy Research Working Paper #2972, World Bank, February.
- Ahluwalia, Montek S, dan Hollis B. Chenery, 1979. Growth and Poverty in Development Countries, Journal of Development Economics, Volume 16 September 1979, pp. 298-323.
- Anand, S. and Sen, A. 2000. Human Development and Economic Sustainabi-lity, World Develop ment 28 (12): 2029-2049
- Balisacan, A. and Pernia, E. 2002. Probing Beneath Cross-national Averages: Poverty, Inequality, and Growth in the Philippines
- Balisacan, A., E.M. Perina, dan A. Asra, 2003. Revisiting Growth and Poverty in Indonesia: What do Subnational Data Show? Bulletin of Indonesia Economic Studies, Volume 39, Issue 3, December 2003.
- Barro, R.J., 1990. Goverment Spending in A Simple Models of Endogenous Growth. Journal of Political Economy.
- Barro and Sala-i-Martin 1990, “Public Finance in Models of Economic Growth” WP No 3362, NBER
- Barro, R.J., and Sala-i-Martin, 2004. Economic Growth 2nd Edition. London. England. The MIT Press Cambridge, Massachusetts.
- Bigsten, A., & Levin, J. 2001. Growth, income distribution, and poverty: A review. World Institute for Development Research Discussion Paper No. 2001/129
- Boex, Jameson, dkk, 2006, Fighting Poverty Through Fiscal Decentralization
- Cheyne Christine, O’Brien Mike and Belgrave Michael, 1998. Book Review: Social Policy in Aotearoa/New Zealangd: A Critical Introduction. Article January 1998.
- Christy, Fhino Andrea & Adi, Priyo Hari. 2009. Hubungan Antara Dana Alokasi Umum, Belanja Modal, dan Kualitas Pembangunan Manusia. The 3rd National Conference UKWMS page 14. 10 Oktober 2009: Surabaya
- Connolly, Sara and Alistair Munro. 1999. Economics of The Public Sector. New York: Prentice Hall
- Danielson, Anders, 2002. Poverty, Inequality, and Growth in Jamaica, 1988-1998, and Beyond, Paper was presented at the IIIrd CEISEL conference, Amsterdam, July 3-7, 2002.
- Demombynes, Gabriel and Johannes G. Hoogeveen, 2004. Growth, Inequality and Simulated Poverty Paths for Tanzania, 1992-2002, The World Bank, Policy Research Working Paper #3432, October.
- Devarajan, S., Saroop, V., and Heng-fu Zou, 1996. The Composition of Public Expenditure and Economic Growth. Journal of Monetary Economics 37:313-344.
- Dollar, David and Aart Kraay, 2002. Growth is Good for the Poor, Journal of Economic Growth 7(3): 195-225.
- Gupta, and Mitra, 2004, Economic Growth, Helath and Poverty: An Exploratory Study For India, Development Policy Review, 2004.
- Hayek F 1945, “The Road to Serfdom” The Institute of Economic Affairs
- Jafarov, Etibar dan Gunnarsson, Victoria. 2008. Government Spending on Health Care and Education in Croatia: Efficiency and Reform Option. IMF Worrking Paper
- Jhingan, M.L, 1999. Ekonomi Perencanaan dan Pembangunan. Jakarta : Raja Grafindo Persada.
- Kaldor, N. 1970, The Case for Regional Policies, Scottish Journal of Political Economy, Vol. 18 pp. 337-348. Reprinted in Scottish journal of Political Economy
- Klasen, Stephen. 2005. Measuring Poverty And Deprivation In South Africa. Review of Income and Wealth Volume 46, Issue 1, pages 33–58, March 2000
- Knowles, Stephen and Owen, P. Dorian. Education and Health in an Effect-Labour Empirical Growth Model. The Economic Record Vol. 73. No. 223. 1997.
- Kodoatie, R.J. 2003. Manajemen dan Rekayasa Infrastruktur. Pustaka Pelajar, Yogyakarta.
- Koopmans TC 1963, “On the Concept of Optimal Economic Growth” Discussion Paper no 163, Cowles Foundation, Yale University
- Koutsoyiannis A 1982. “Modern Microeconomis, second edition” The Macmillan Press, London
- Kuznets, Simon, 1955, Modern Economic Growth : Structure and Spread. London : Yale University Press
- Lanjouw, P, M Pradhan, F Saadah, H Sayed. R Sparrow, 2001 Poverty, Educationand Health in lndonesia:Who Benefits from Public Spending?World BankWorking Paper No 2739 Washington D C.:World Bank
- Lee, Jong-Wha. 2005. “Economic Growth and Human Development in The rwww.hdr.undp.org/docs/publications/occationalpapers/oc24aa. Pebruari, 6, 2006.
- Lewis, Arthur W., 1954, Economic Development with Unlimited Supplies Labour, Manchester : Manchester School Press.
- Li, Hongyi and Liang, Huang, 2010, Helath, Education, and Economic Growth in East Asia, Journal of Chinese and Foreign Trade Studies, vol. 3 No. 2, 2010.
- Lokshin, Michael & Yemtsov, Ruslan, 2003. "Evaluating the impact of infrastructure rehabilitation projects on household welfare in rural Georgia," Policy Research Working Paper Series 3155, The World Bank
- Majdi, Mekdem, 2012, Study of teh Relation Between Health and Economic Growth, Interdisciplinary Journal of Contenporary Research in Business, May 2012 vol. 4 No. 1.
- Mankiw, Romer dan Weil 1992, “A Contribution to the Empirics of Economic Growth” The Quarterly Journal of Economics, Vol. 107, No. 2, pp. 407-437, JSTOR.
- Mankiw, N.Gregory.2000.Teori Makro Ekonomi Ed.4, Jakarta: Penerbit Airlangga.
- Mankiw, N.Gregory. 2003. Macroeconomics. Fifth Editions. New York. Worth Publishers. 41 Madison Avenue.
- Mardiasmo, 2004. Otonomi dan Manajemen Keuangan Daerah, Penerbit, Andi Offset, Yogyakarta.
- Martinez-Vazquez, J.,and R. McNab, 1997. Fiscal Decentralization, Economic Growth, and Demogratic Governance. International Studies Program, Working Paper 97-7, Atlanta, Geogia State University.
- McGee Rosemary and Brock Karen 2001, ”From poverty Assessment To Policy Change: Processes, Actors And Data” Working Paper 133, Institutes Of Development Studies, Brighton Sussex England..
- Meier, G. M. dan J. E. Rauch. 2000. Leading Issues in Economic Development (seventh edition). New York-Oxford: Oxford University Press
- Miles, D., G. Myles, dan I. Preston, 2003. The Economics of Public Spending. New York, Oxford University Pree.
- Mills dan Pernia. 1993. Korelasi Pertumbuhan Ekonomi dan Tigkat Kemiskina di Indonesia. https://yusniarisanti0795.wordpress.com
- Mundle, S 1998, "Financing Human Development: Some Lessons from Advanced Asian Countries", World Development 26 (4):659-672
- Musgrave, Richard S., and Peggy B. Musgrave. 1989. Public Finance in Theory and Practice. New York: McGraw-Hill Book Company
- Myrdal, G. 1957. Economic Theory and Underdeveloped Region, Chapter 3: The Drift Towards Economic Inequalities In A Country
- Oluwatobi, Stephen, O. And Ogunrinola, I. Oluranti, 2011, Goverment Expenditure on Human Capital Development: Implications for Economic Growth in Nigeria; Journal of Sustainable Development, Departement of Economics and Development Studies, Covenant University Nigeria, 2011.
- Onuorah, A.C., and Akujuobi, L.E., 2012. Empirical Analysis of Public Expenditure and Economic Growth in Nigeria. Arabian Journal of Business and Management Review. Vol. 1. No. 11. 2012.
- Owen, Robert G. 1987. Organization Behaviour in Education. New Jersey: Englewood Clift)
- Parikesit, D., H. Purwoto and O. Z. Tamin. 2000. Economic Impact and Indirect Benefit of the Road Sector Budget. WP04: Technical Report. A Report prepared for SEPM Project Team, Jakarta
- Perkons, D.H., S. Radelet, D.R. Snodgrass, M. Gillis, 2001. Economics of Development, Fifth Edition, New York, WW. Norton & Company.
- Pigou, A.C M.A., 1960. The Economic of Welfare. Fourth Edition,. London; Mac Millan & CO LTD.
- Poli,WIM, 2010. Tonggak-tonggak Sejarah Pemikiran Ekonomi, Brilliant Internasional Cetakan Pertama.
- Pradhan, Rudra Prakash, 2010, Transport Infrastucture, Energy Consumption and Economic Growth Triangle in India: Contigration and Causality Analysis, Journal of Sustainable Development, Vinod Gupta School of Management, India Institute of Technology Kharagpur, India, 2010.
- Premchand, Arigapudi. 1999. Public Financial accountability, governance, corruption, and public financial management, by salvatore schiavecampo, ADB. November, Manila: 145-192
- Presber, Julian, J.H., 2011. The Chines Financial System and Its Impact On Economic Growth In China. The ISM Journal of International Business, 2011.
- Qiao, Martinez-Vazquez, dan Xu 2008. Expenditure Assignments in China
- Qureshi, Muhammad Azeem, 2009. Human development, public expenditure and economic growth: a system dynamics approach. System Dynamics Group, School of Social Sciences, University of Bergen, Bergen, Norway and Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan
- Ramirez, A., Raniz, G., and Stewart, F. 1998. Economic Growth and Human Capital, World Development 28 (2): 197-219.
- Raniz, G., and Stewart, F. Strategy for Success in Human Development. http://hdr.undp.or./docs/training/oxford/reading/Ranis%20and%20stewart.pdf 15 Pebruari 2005.
- Ranis G and Steward 2002, “Economic growth and human development in Latin America” Cepal Review 78
- Ravallion, Martin, 1995. Growth and Poverty: Evidence for Developing Countries in the 1980s, Economics Letters 48: 411-417.
- Ravallion, M. and G. Datt., 2000. When Growth is Pro-Poor? Evidence from the Diverse Experience of Indian States, The World Bank, Policy Research Working Paper #2263.
- Richardson, W, Harry, 1978. Regional and Urban Economics. Penguin Books. Great Britain : The Chauses Press Ltd.
- Rosen, H.S., and T. Gayer, 2008. Public Finance, Eighth Edition. Singapore and New York, McGraw-Hill International Edition.
- Safdari, Mehrizi, and Elahi, 2011. Impact of Human Capital on Economic Growth in Iran. European Journal of Economics, Finance and Administrative Sciences. ISSN 1450-2275 Issue 41 (2011). © EuroJournals, Inc. 2011. http://www.eurojournals.com
- Sen, A., 1999. Employment, Tachonology, and Development, Indian ed. Oxford University Press, New Delhi.
- Sepulveda, Cristian F., 2010, The Consequences of Fiscal Decentralization on Poverty and Inequality, George State University.
- Shelly, Gary L., and Wright, David B., 2008. Incremental State Higher Education Expenditures. International Atlantic Economic Society, 2008.
- Solow, R.M., 2000. Growth Theory: An Exposition. New York, Oxfodr University Press.
- Son HH and Kakwani N 2004, “Economic Growth And Poverty Reduction: Initial Conditions Matter”, Working Paper No 2 International Poverty Centre, UNDP,
- Soubbotina, T.P. 2004. Beyond Economic Growth (An Introduction to Sustaianable Development). The World Bank : Washington, D.C
- Sumner, Andy, 2012, The Evolving Composition of Poverty in Middle-Income Countires: The Case of Indonesia 1991-2007, IDS Working Paper, Volume 2012 No. 409.
- Tachiwou, Aboudou Maman, 2011. Infrasturcture Development and Economic Growth in Togo. International Journal of Economics and Finance, Vol. 3. No. 3. 2011.
- Tang, Chor Foon and Lai, Yew Wah The Causal Relationship between ealth and Education Expenditures in Malaysia. Theoretical and Applied Economics Volume XVIII (2011), No. 8(561), pp. 61-74
- Todaro, Michael, P., dan Smith, SC. 2003. Economic Development. Eighth Edition. Pearson Education.
- Todaro , Michael, P., 2004. Pembangunan Ekonomi di Dunia Ketiga. Penerbit Erlangga Edisi Kedelapan, 2004.
- Tresch, R.W., 2008. Public Sector Economics. New York, Palgrave Macmillan.
- Tri, Maryani, 2011. Analisis Indeks Pembangunan Manusia di Provinsi Jawa Tengah, Tesis, UPN Veteran, Yogyakarta.
- UNDP, 2006. Beyond Scarcity: Power, Poverty and The Global Water Crisis. Human Development Report 2006. New York, UNDP.
- Van Den Berg, H. 2005. Economic Growth and Development: An Analysis of Our Economic Achiefments and Our Most Exciting Challenges. Singapore and New York, McGraw-Hill International Edition, Economic Series.
- Vanegas, Manuel 2014. The triangle of poverty, economic growth, and inequality in Central America: does tourism matter?Department of Applied Economics, University of Minnesota, Falcon Heights, Minnesota, USA
- Wodon, Quentin T., 1999. Growth, Poverty, and Inequality: A Regional Panel for Bangladesh, The World Bank, Policy Reasearch Working Paper #2070, March.
- World Bank. 1994. World Development Report: Infrastructure for Development. Oxford University Press, New York.
- World Bank, 2007c. Analisis Pengeluaran Publik Papua: Sebuah Tinjauan Umum Keuangan Daerah dan Pelayanan Publik Pada Wilayah Tertinggal DI Indonesia. Pemda Papua, Support Office For Eastern Indonesia (SofEI), The World Bank.
- Yao, Guevera Assamoi, 2007, Fiscal Decentralization and Poverty Reduction Outcomes: Theory and Evidence, George State University.
- Xie, D., Zou, H. and Davoodi, H. 1999. “Fiscal decentralization and economic growth in the United States”, Journal of Urban Economics, 45(2), , 228–39.
- Zaman, Miethy, 2012. Human Capital and Economic Growth: An empirical investigation using panel data, (MSc Student, Economics, University of Nottingham, United Kingdom). IOSR Journal Of Humanities And Social Science (JHSS). ISSN: 2279-0837, ISBN: 2279-0845.Volume 4, Issue 6 (Nov. - Dec. 2012), PP 43-56 Www.Iosrjournals.Org.