Inclusive Economic Development in Indonesia: An Empirical Study of Local Government Contribution

Abstract

This research attempts to present empirical evidence of the determinants of inclusive economic development in Indonesia, specifically from local government contributions. We used secondary data from the related government institutions in Indonesia in 2019, analyzed with multiple regression. Our analysis figures out that the local governments have reached a satisfactory level of inclusive economic development, although the West Indonesian region still delivers better achievements than the East Indonesian region. Moreover, the empirical analysis demonstrates an insignificant effect on local government economic function development and local wealth, which indicates the need for improvement. Meanwhile, the supervision conducted by the local government exhibits a positive effect on inclusive economic development, which emphasizes the importance of the government's role in safeguarding public interest in the pursuit of local development improvement. The study provides several practical implications for local governments to increase their role in supporting inclusive economic development. First, the quality of spending in local government must be improved from planning to realization. Local governments should also optimize local wealth with optimal asset utilization to realize its potential benefits. Finally, adequate supervision must be maintained in both procedural and financial aspects in every program implementation so that inclusive economic development can occur all over Indonesia.