Analysis of Determinants of Local Own-Source Revenue of Bali Province: A Panel Data Approach
DOI:
https://doi.org/10.12928/jampe.v5i1.12702Keywords:
Economic growth, Foreign direct investment , Local expenditure, Local own-source revenue , Total revenueAbstract
This study examines the impact of economic growth, foreign direct
investment (FDI), local expenditure, and population on local own-source
revenue (PAD) in Bali Province from 2012 to 2023. Employing a
quantitative approach with panel data from nine districts/cities, the
study applies Common Effect Model (CEM), Fixed Effect Model (FEM),
and Random Effect Model (REM). The research contributes to the
existing literature in three novel ways: first, it is the pioneering study
examining PAD determinants in a tourism-dependent economy during
post-COVID-19 recovery period; second, it provides comprehensive
empirical evidence on the asymmetric effects of population growth on
regional revenue in tourism-centric regions; and third, it introduces an
integrated analytical framework combining macro-fiscal and
demographic variables for regional revenue analysis. Based on the
Chow, Hausman, and Lagrange Multiplier tests, CEM was selected as the
most appropriate model, with three variables significant at 1% level. The
analysis reveals that FDI and local expenditure exert significant positive
effects on PAD, whereby each unit increase in FDI raises PAD by 14.53%
and each Rp 1 increase in local expenditure increases PAD by 103.69%.
Conversely, population has a significant negative effect, with each
additional person decreasing PAD by 75.71%, while economic growth
exhibits no significant influence. The model explains 79.88% of the
variation in PAD, with the remaining 22.12% influenced by external
factors. To optimize development, several key strategies are
recommended, including economic diversification beyond tourism,
simplifying investment licensing procedures, optimizing productive
regional spending, and improving human resource quality through
market-oriented vocational education.
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