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The Relationship between the Government Size and Economic Growth in South Sumatra

Author

Listed:
  • Khairunisah Rahmatullah

    (Sriwijaya University, Palembang, Indonesia)

  • Azwardi

    (Sriwijaya University, Palembang, Indonesia)

  • Sairuki Sukanto

    (Sriwijaya University, Palembang, Indonesia)

Abstract

In general, many factors, including government spending, influence economic growth. In many theoretical and empirical studies, government spending is seen from the ratio between government spending and Gross Domestic Product (GDP) or government size. This research aims to examine the influence of government size on economic growth in districts/cities of South Sumatra Province. The government size to be analyzed is the amount of government spending on public services, housing and public facilities, education, and health. The data used in this study is secondary data for the 2010-2020 and covers 15 regencies/cities. The data was obtained from the Central Statistics Agency and the Regional Financial and Asset Management Agency. The analytical technique used in this research is descriptive analysis technique and quantitative analysis. Klassen Typology Approach was used to identify the regencies/cities with fast growth and the relatively lagging regencies/cities of South Sumatra Province. The study results show that government spending on public services and health has a positive and significant effect on economic growth. Meanwhile, the government spending on housing and public facilities has a positive and insignificant effect. In contrast, the government spending on education has a negative and significant impact on economic growth. This study recommends local governments increase the allocation of regional expenditure to sectors that lead to economic growth, especially in newly created regions.

Suggested Citation

  • Khairunisah Rahmatullah & Azwardi & Sairuki Sukanto, 2022. "The Relationship between the Government Size and Economic Growth in South Sumatra," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 110-118, September.
    • Handle: RePEc:iaf:journl:y:2022:i:3:p:110-118
    DOI: 10.33146/2307-9878-2022-3(97)-110-118
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    government size; government spending; economic growth; Klassen typology; inverted Armey u curve;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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