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Oct 13, 2025 by vinooalluri.com 117 views

Analysis of the Effect of Economic Growth, Population, and Public Consumption of Government Spending with Local Taxes as Intervening Variables in Regencies/Cities in North Sumatra

Introduction

The relationship between economic growth, population, and public consumption of government spending is a complex issue that has been studied extensively in various regions. In North Sumatra, a province in Indonesia, the government spending is influenced by several factors, including economic growth, population, and public consumption. This study aims to examine the effect of these factors on government spending in regencies/cities in North Sumatra, with a focus on the role of local taxes as intervening variables.

Background

North Sumatra is one of the provinces in Indonesia that has experienced rapid economic growth in recent years. The province has a large population, with a total of 13.8 million people, according to the 2020 census. The population growth rate is high, with an average annual growth rate of 2.3%. The province also has a high level of public consumption, with a total expenditure of IDR 143.8 trillion (approximately USD 10.2 billion) in 2020.

The government spending in North Sumatra is primarily funded by local taxes, which include income tax, value-added tax (VAT), and property tax. The local taxes are collected by the regencies/cities and are used to fund various public services, including education, healthcare, and infrastructure development.

Methodology

This study used a quantitative approach, with a focus on multiple linear regression analysis. The data used in this study were obtained from the Central Statistics Agency (BPS) and covered all 33 districts/cities in North Sumatra during the 2010-2013 period. The independent variables used in this study were economic growth, population, and public consumption, while the dependent variable was government spending.

The study tested two main hypotheses:

Direct Effects: Does economic growth, population, and community consumption directly affect government spending?
Indirect effect: Does economic growth, population, and community consumption affect government spending through local taxes?

Results

The results of this study showed that:

*** Economic growth **: positive but not significant effect on government spending. This shows that although economic growth contributes to increasing government spending, the effect is not strong enough to be considered significant. *** Number of population and public consumption **: positive and significant effect on government spending. This finding shows that an increase in population and public consumption has a significant impact on increasing government spending.

Discussion

The results of this study have important implications for local governments in North Sumatra. The findings suggest that economic growth, population, and public consumption do affect government spending, both directly and indirectly through local taxes. This means that local governments need to consider these factors when making policies to improve the welfare of the people in North Sumatra.

Conclusion

This study has shown that economic growth, population, and public consumption do affect government spending in regencies/cities in North Sumatra, with local taxes playing an important role as intervening variables. The findings of this study have important implications for local governments in North Sumatra, and highlight the need for sustainable development strategies that consider the needs of the population and balanced economic growth.

Recommendations and Application

Based on the findings of this study, the following recommendations are made:

*** Increasing the efficiency of Regional Tax Collection **: Local governments need to increase efforts to collect regional taxes to support increasing government spending due to population growth and public consumption. *** Sustainable development strategies **: Local governments need to design sustainable development strategies by considering the needs of the population and balanced economic growth. *** Transparency and Accountability of Financial Management **: The application of transparency and accountability in regional financial management is very important to increase public confidence and maximize the effectiveness of government spending.

Deeper Analysis

This study can be expanded by considering other factors that can affect government spending, such as geographical conditions, education levels, and regional infrastructure. By understanding the relationship between economic growth, population, community consumption, and government expenditure, local governments can make policies that are more targeted to improve the welfare of the people in North Sumatra.

Limitations

This study has several limitations, including:

The data used in this study were obtained from the Central Statistics Agency (BPS) and may not reflect the current situation in North Sumatra.
The study only considered economic growth, population, and public consumption as independent variables, and did not consider other factors that may affect government spending.
The study only focused on regencies/cities in North Sumatra and did not consider other regions in Indonesia.

Future Research Directions

This study can be expanded by considering other factors that can affect government spending, such as geographical conditions, education levels, and regional infrastructure. Additionally, the study can be replicated in other regions in Indonesia to compare the findings with those of this study.

Conclusion

In conclusion, this study has shown that economic growth, population, and public consumption do affect government spending in regencies/cities in North Sumatra, with local taxes playing an important role as intervening variables. The findings of this study have important implications for local governments in North Sumatra, and highlight the need for sustainable development strategies that consider the needs of the population and balanced economic growth.
Q&A: Analysis of the Effect of Economic Growth, Population, and Public Consumption of Government Spending with Local Taxes as Intervening Variables in Regencies/Cities in North Sumatra

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of economic growth, population, and public consumption of government spending in regencies/cities in North Sumatra, with a focus on the role of local taxes as intervening variables.

Q: What are the independent variables used in this study?

A: The independent variables used in this study are economic growth, population, and public consumption.

Q: What are the dependent variables used in this study?

A: The dependent variable used in this study is government spending.

Q: What is the methodology used in this study?

A: The methodology used in this study is multiple linear regression analysis.

Q: What are the findings of this study?

A: The findings of this study show that economic growth has a positive but not significant effect on government spending, while population and public consumption have a positive and significant effect on government spending.

Q: What are the implications of this study?

A: The implications of this study are that local governments in North Sumatra need to consider the effects of economic growth, population, and public consumption on government spending when making policies to improve the welfare of the people in the region.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

Increasing the efficiency of regional tax collection
Designing sustainable development strategies that consider the needs of the population and balanced economic growth
Applying transparency and accountability in regional financial management

Q: What are the limitations of this study?

A: The limitations of this study are:

The data used in this study may not reflect the current situation in North Sumatra
The study only considered economic growth, population, and public consumption as independent variables, and did not consider other factors that may affect government spending
The study only focused on regencies/cities in North Sumatra and did not consider other regions in Indonesia

Q: What are the future research directions of this study?

A: The future research directions of this study are:

Considering other factors that can affect government spending, such as geographical conditions, education levels, and regional infrastructure
Replicating the study in other regions in Indonesia to compare the findings with those of this study

Q: What are the practical implications of this study?

A: The practical implications of this study are that local governments in North Sumatra can use the findings of this study to make informed decisions about government spending and to design policies that are more targeted to improve the welfare of the people in the region.

Q: What are the policy implications of this study?

A: The policy implications of this study are that local governments in North Sumatra need to consider the effects of economic growth, population, and public consumption on government spending when making policies to improve the welfare of the people in the region. This can be achieved by increasing the efficiency of regional tax collection, designing sustainable development strategies, and applying transparency and accountability in regional financial management.

Q: What are the future research opportunities of this study?

A: The future research opportunities of this study are:

Conducting a more in-depth analysis of the relationship between economic growth, population, and public consumption and government spending
Examining the effects of other factors that may affect government spending, such as geographical conditions, education levels, and regional infrastructure
Replicating the study in other regions in Indonesia to compare the findings with those of this study.