The Effect of Special Autonomy Funds on Economic Growth and Income Inequality in Aceh Province
The Effect of Special Autonomy Funds on Economic Growth and Income Inequality in Aceh Province

Summary/Abstract: This study aimed to analyze the impact of Special Autonomy and other funds through capital expenditures and expenditures on goods and services on economic growth and income inequality. This study used the panel data of 2000-2016 in 23 regencies/cities of Aceh Province using Fixed Effect Model (FEM) analysis. The results of this study showed that before the Special Autonomy Fund, the Special Allocation Fund (DAK), General Allocation Fund (DAU), Revenue Sharing Fund (DBH), and Local Own-Source Revenue (PAD) have a positive and significant effect on Gross Regional Domestic Product (GRDP) and Gini ratio through capital expenditure, however, the significant and positive effect on GRDP and Gini Ratio through expenditures on goods and services is only found from Local Own-Source Revenue (PAD). After the existence of Special Autonomy Funds, it is only the Special Allocation Fund (DAK) that has a positive and significant effect on GRDP and Gini ratio through capital expenditures, while the significant effect on expenditures on goods and services is found from DAK, DAU and PAD variables. The results showed that the Special Autonomy and Revenue Sharing Funds still do not have significant effect in increasing economic growth and reducing Gini ratio through both capital expenditures and expenditures on goods and services.

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