The Role of Capital Expenditure in Regional Fiscal Policy

Oct 13, 2025 by vinooalluri.com 13 views

Effect of Capital Expenditures and Regional Original Revenues on Increasing Per Capita Revenue in Regency/City Government of West Java Province (2010-2013)

Introduction

The management of regional finances is a crucial aspect of local governance, as it directly impacts the quality of life of the community. In this context, the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province during the 2010-2013 period is a significant issue that warrants investigation. This study aims to analyze the causal relationship between these variables and their impact on per capita revenue.

Methodology

This study employed a causal research design with a sample of nine regencies/cities from a total of 27 regencies/cities in West Java Province. The data used was secondary data obtained from the Central Java Statistics Agency (BPS), specifically data relating to the realization of the Regional Budget (APBD). The analysis method used was Bayes SEM, which was operated through AMOS 22 software. For hypothesis testing, this study utilized linear regression with the Bayesian parameter estimation method.

Analysis of the Effect of Capital Expenditures and Regional Original Revenues

The effect of capital expenditure and local revenue on per capita income is a critical issue in regional fiscal policy. Capital expenditure is usually used for investment in infrastructure and public services that are expected to improve the quality of life of the community. However, in this study, it was found that capital expenditure actually has a negative impact on per capita income. This could be caused by several factors, such as the use of less efficient capital expenditure or the existence of budget deviations that do not provide maximum results.

On the other hand, local original income has a significant positive contribution. This shows that income originating from local sources, such as taxes and levies, can increase per capita income. That is, when the local government succeeds in maximizing income from local sources, the community will feel a better improvement of living standards. Regional original income can also function as a driver for sustainable development, which is important for the welfare of the community.

The Role of Capital Expenditure in Regional Fiscal Policy

Capital expenditure is a crucial component of regional fiscal policy, as it is used to invest in infrastructure and public services that are expected to improve the quality of life of the community. However, in this study, it was found that capital expenditure actually has a negative impact on per capita income. This could be caused by several factors, such as the use of less efficient capital expenditure or the existence of budget deviations that do not provide maximum results.

The Importance of Regional Original Income

Regional original income has a significant positive contribution to per capita income. This shows that income originating from local sources, such as taxes and levies, can increase per capita income. That is, when the local government succeeds in maximizing income from local sources, the community will feel a better improvement of living standards. Regional original income can also function as a driver for sustainable development, which is important for the welfare of the community.

Research Implications

The results of this study indicate the need for more attention to the management of capital expenditure in local governments. Policy makers need to conduct an in-depth evaluation of projects financed by capital expenditure to ensure that the investment really provides benefits to the community. In addition, efforts to increase local revenue must also be intensified through better taxation policy reforms and regional resource management.

Conclusion

This study provides valuable insights into the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province during the 2010-2013 period. The results of this study indicate the need for more attention to the management of capital expenditure in local governments and the importance of regional original income in increasing per capita revenue. With a clear focus on an effective strategy in managing the regional budget, the Regency/City Government in West Java Province can optimize the existing potential and provide maximum benefits for its citizens.

Recommendations

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

Policy makers need to conduct an in-depth evaluation of projects financed by capital expenditure to ensure that the investment really provides benefits to the community.
Efforts to increase local revenue must also be intensified through better taxation policy reforms and regional resource management.
The Regency/City Government in West Java Province should prioritize the management of capital expenditure and regional original income to optimize the existing potential and provide maximum benefits for its citizens.

Limitations of the Study

This study has several limitations that need to be acknowledged. Firstly, the study only analyzed the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province during the 2010-2013 period. Secondly, the study only used secondary data obtained from the Central Java Statistics Agency (BPS), which may not be comprehensive or up-to-date. Finally, the study only analyzed the causal relationship between capital expenditures and regional original revenues and per capita revenue, without considering other factors that may also impact per capita revenue.

Future Research Directions

This study provides a foundation for further research on the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province. Future research could explore the following directions:

Analyzing the effect of capital expenditures and regional original revenues on increasing per capita revenue in other provinces or regions.
Examining the impact of other factors, such as economic growth, population growth, and infrastructure development, on per capita revenue.
Investigating the role of taxation policy reforms and regional resource management in increasing local revenue.

By exploring these research directions, future studies can provide a more comprehensive understanding of the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province.
Frequently Asked Questions (FAQs) on the Effect of Capital Expenditures and Regional Original Revenues on Increasing Per Capita Revenue in Regency/City Government of West Java Province (2010-2013)

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province during the 2010-2013 period.

Q: What is the research design used in this study?

A: This study employed a causal research design with a sample of nine regencies/cities from a total of 27 regencies/cities in West Java Province.

Q: What is the data source used in this study?

A: The data used in this study is secondary data obtained from the Central Java Statistics Agency (BPS), specifically data relating to the realization of the Regional Budget (APBD).

Q: What is the analysis method used in this study?

A: The analysis method used in this study is Bayes SEM, which was operated through AMOS 22 software. For hypothesis testing, this study utilized linear regression with the Bayesian parameter estimation method.

Q: What are the findings of this study?

A: The findings of this study indicate that capital expenditure has a negative impact on per capita income, while regional original income has a significant positive contribution to per capita income.

Q: What are the implications of this study?

A: The results of this study indicate the need for more attention to the management of capital expenditure in local governments and the importance of regional original income in increasing per capita revenue.

Q: What are the recommendations of this study?

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

Policy makers need to conduct an in-depth evaluation of projects financed by capital expenditure to ensure that the investment really provides benefits to the community.
Efforts to increase local revenue must also be intensified through better taxation policy reforms and regional resource management.
The Regency/City Government in West Java Province should prioritize the management of capital expenditure and regional original income to optimize the existing potential and provide maximum benefits for its citizens.

Q: What are the limitations of this study?

A: This study has several limitations that need to be acknowledged. Firstly, the study only analyzed the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province during the 2010-2013 period. Secondly, the study only used secondary data obtained from the Central Java Statistics Agency (BPS), which may not be comprehensive or up-to-date. Finally, the study only analyzed the causal relationship between capital expenditures and regional original revenues and per capita revenue, without considering other factors that may also impact per capita revenue.

Q: What are the future research directions?

A: This study provides a foundation for further research on the effect of capital expenditures and regional original revenues on increasing per capita revenue in regency/city government of West Java Province. Future research could explore the following directions:

Analyzing the effect of capital expenditures and regional original revenues on increasing per capita revenue in other provinces or regions.
Examining the impact of other factors, such as economic growth, population growth, and infrastructure development, on per capita revenue.
Investigating the role of taxation policy reforms and regional resource management in increasing local revenue.