Use of Public Funds and the Flypaper Effect; Analysis of Regional Expenditure in Four Indonesian Provinces

DOI

10.2991/978-94-6463-443-3_29How to use a DOI?

Keywords

Flypaper Effect; Indonesian Province; Local Spending; Public Finance; Transfer of Funds; Use of Public Funds

Abstract

This study aims to analyze the use of public funds and the impact of the Flypaper Effect on regional spending in Indonesia’s four newly expanded provinces. The Flypaper Effect refers to the phenomenon where transfers of funds from central government to regions tend to be higher than the amount that should be received based on local conditions. This study involves four newly created provinces, namely West Papua, Gorontalo, North Maluku, and West Sulawesi. The research analyzed secondary data collected from various sources related to regional spending and transfers of central government funds. The analytical approaches used were panel regression and other statistical tests to identify the relationship between the use of public funds and the Flypaper Effect in the four provinces. The results showed Flypaper Effect phenomenon only occurred in the West Papua and Gorontalo Provinces. Meanwhile, in North Maluku and West Sulawesi, the Flypaper Effect phenomenon did not occur. This research provides important insights regarding public fund management policies and budget allocations at the regional level. The government needs to improve the fund transfer system and strengthen regional capacity in managing public finances can be important steps to reduce the dependence of provinces on funds from the central government.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Nanang Rusliana
AU  - Dyah Ciptaning Lokiteswara Setya Wardhani
AU  - Raisa Hillia Aini Syifa
PY  - 2024
DA  - 2024/06/26
TI  - Use of Public Funds and the Flypaper Effect; Analysis of Regional Expenditure in Four Indonesian Provinces
BT  - Proceedings of the 8th Global Conference on Business, Management, and Entrepreneurship (GCBME 2023)
PB  - Atlantis Press
SP  - 200
EP  - 208
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-443-3_29
DO  - 10.2991/978-94-6463-443-3_29
ID  - Rusliana2024
ER  -