Title: Does government spending really contribute to development? Evidence from Indonesia

Authors: Sutaryo Sutaryo; Taufiq Arifin; Muhtar Muhtar; Ekwanto Ekwanto

Addresses: Faculty of Economics and Business, Department of Accounting, Universitas Sebelas Maret, Jalan Ir. Sutami 36A, Surakarta, 57126, Central Java, Indonesia ' Faculty of Economics and Business, Department of Accounting, Universitas Sebelas Maret, Jalan Ir. Sutami 36A, Surakarta, 57126, Central Java, Indonesia ' Faculty of Teacher Training and Education, Department of Accounting Education, Universitas Sebelas Maret, Jalan Ir. Sutami 36A, Surakarta, 57126, Central Java, Indonesia ' Badan Pengawasan Keuangan dan Pembangunan Republik Indonesia, Jalan Pramuka 33, East Jakarta, 13120, Jakarta, Indonesia

Abstract: The implementation of decentralisation in Indonesia still invites public concern about local development, especially in realising the outcomes of government spending, that marks the urgency for a comprehensive study in this field. This study aims to comprehensively investigate the impact of government spending on development outcomes. Our study utilises secondary data from the authorised government institutions in Indonesia during 2015-2021 fiscal period, analysed with multiple regression analysis. We report that the development across Indonesia still experiences significant issues that requires urgent improvement. Overall, we find that government spending exhibits positive effect on development. Based on our findings, we suggest the government to improve the quality of the spending so that the spending realisation can be translated into the desired development outcomes to push the development towards a developed country. It is important to keep improving the management of the spending from the budget planning, realisation, until accountability evaluation.

Keywords: Indonesia; local government; decentralisation; government spending; development.

DOI: 10.1504/IJMEF.2025.148855

International Journal of Monetary Economics and Finance, 2025 Vol.18 No.5, pp.299 - 315

Received: 12 Dec 2023
Accepted: 29 Oct 2024
Published online: 29 Sep 2025 *

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