Impact of Corruption to Regional Economic Growth in Indonesia (Study Case: Regional Budget Corruption Assumption Mechanism in Banten Province Government at 2011).

Abstract

Decentralization is marked with the announcement of Regulation Number 22 in 1999 about the Region Government, and Regulation Number 25 in 1999 about the Financial Proportion between Central and Region Government. But apparently there are lots of problems in the implementations, one of them is a lot of corruption cases are revealed, with lots of corruption suspects are the authorities in that region and the resource of corruption is the local budget. Finally, that may bring a negative impact for the region economic growth. The aims of this study are: (1) To analyze local budget corruption in the mechanism of rent seeking at Banten Province, (2) To analyze the impact of corruption for the regional economic growth in Indonesia. Result showed that there is a local budget corruption assumptions have been done by the executive and legislative persons with the cooperation with the third person in the local budget managing, that behavior is triggered by the high cost political system. Then the result of the data processing showed that the impact of corruption for the regional economic growth is negative and significant, which means the region economic growth should have been more higher than now. In that case, an effort should be done to increase the region economic growth by eliminating the corruption in Region/national level by starting to create a low budget political system.