The Impact of Total Investment, Local Goverment Expenditure and Work Labour on Economic Growth in Bogor City

Abstract

The role of local governments in Indonesia can be considered very dominant since the era of regional autonomy in 2001. As the implications of granting authority ' s broader to local governments, the required to independently executing development, both the planning or implementation is based on the principles of regional autonomy. Economic growth cannot be separated from the role of government spending in the public services. Local government spending is measured from the total routine expenditure and development spending allocated in the budget area. Meanwhile, local government expenditures depends on regional income which includes the transfer and revenue. This study was aimed at describing between General allocation fund and Regionally Original Income which one has more influence on the regions’ spending, and analyze the magnitude of the impact of investment, local government expenditures and labor force against economic performance in Bogor city. The method used is descriptive analysis and multiple linear regression and is suspected by the method of Ordinary Least Square (OLS). To analyze the economic performance used secondary data from 1990 through 2011. To analyze the independence of local governments used secondary data from 2001 through 2011. Identification results showed that the transfer ratio (General and Special allocation fund) to total local revenues showed a negative slope, and the ratio of local revenue (Local Revenue and Revenue-sharing) of the total revenues showed a positive slope so it can be said to be Independently in revenues for Bogor city, although still dependent to the central government. The results also show that General allocation fund and Regionally Original Income significant effect on total expenditures, and the response of total regional expenditures to greater Regionally Original Income rather than transfer of funds (General allocation fund), so it can be said that the present Bogor City more self-reliant in the reception. Research also shows that economic growth is positively and significantly influenced by investment the previous year (INVt-1), infrastructure spending, education spending three years earlier, and the total labor force. City minimum wage significant negative effect on investment (INV) in Bogor City. But the city minimum wage, health expenditures and investment the previous year (INVt-1) positive significant effect on the human development index.