Increasing the effectiveness of the distribution of DAK

Oct 13, 2025 by magicalceylontours.com 46 views

The Effect of General Allocation Funds and Special Allocation Funds on Increasing Regional Original Revenues in Aceh Province: The Role of Capital Expenditures as Intervening Variables

Introduction

The Aceh Province, located in the northernmost part of Indonesia, has been facing significant challenges in increasing its regional original revenues (PAD). The province's economy has been heavily reliant on oil and gas revenues, which have been declining in recent years. As a result, the provincial government has been seeking alternative sources of revenue to support its development programs. One of the key strategies employed by the provincial government is the allocation of General Allocation Funds (DAU) and Special Allocation Funds (DAK) to support the development of infrastructure and fixed assets.

This study examines the effect of DAU and DAK on increasing PAD in Aceh Province, with a focus on the role of capital expenditure as an intervening variable. The study uses a trimming pathway analysis method to analyze the data, which consists of annual reports on the realization of the Regional Revenue and Expenditure Budget (APBD) during the 2004-2007 period. The study involves 20 districts/cities in Aceh Province that meet certain criteria, resulting in a total of 80 data observations.

Methodology

The study uses a trimming pathway analysis method to analyze the data. This method involves the use of a statistical model to estimate the relationships between the variables of interest. The study also uses a lag analysis to examine the effect of DAU and DAK on PAD over a period of one, two, and three years.

Results

The results of the study show that DAK has a significant influence on capital expenditure, while DAU does not show a significant effect. In one year lag, DAU and capital expenditure are proven to have a significant influence on the increase in PAD, while DAK does not show a significant effect. In two years, DAU and capital expenditure again showed a significant effect on PAD, while DAK still did not show a significant effect. In three years, both DAU, DAK, and capital expenditure have been proven to have a significant influence on the increase in PAD.

Discussion

The results of this study indicate that DAK plays an important role in encouraging increased capital expenditure in Aceh Province. This may be caused by the mechanism of channeling DAK which is more directed and focused on certain development projects. Meanwhile, DAU which is general in nature, may not directly encourage increased capital expenditure because of its flexibility in use.

Increased capital expenditure in Aceh Province in lag one and two years has a positive impact on increasing PAD. This shows that investment in infrastructure and fixed assets through capital expenditure can provide short-term and medium-term benefits in the form of increased PAD. The increase in PAD in the three-year lag shows that the influence of DAU, DAK, and capital expenditure has an accumulative effect and gives significant results on PAD in the long run.

Policy Implications

Based on the results of the study, some of the policy implications that can be taken are:

Increasing the effectiveness of the distribution of DAK: Increasing the effectiveness of the distribution of DAK will encourage increased capital expenditure and will ultimately increase PAD.
Increasing the role of DAU: DAU can be maximized to support development programs oriented to PAD increase.
Encouraging private investment: Private investment can be maximized through the Government and Private Cooperation Scheme (KPPS) to encourage increased capital expenditure and PAD.

The Importance of Capital Investment to Increase PAD

This study shows the importance of capital investment in an effort to increase PAD in Aceh Province. Investment in infrastructure, such as roads, bridges, and other public facilities, can increase connectivity, attract investment, and open new jobs. Investment in fixed assets, such as buildings and equipment, can increase the efficiency and productivity of economic sectors.

Further Research Development

Subsequent research can consider other factors that influence PAD in Aceh Province, such as the quality of governance, investment climate, and potential natural resources. Research can also be done with a longer observation period to see the long-term impact of DAU, DAK, and capital expenditure on PAD.

Conclusion

This study shows that DAU, DAK, and capital expenditure have a significant influence on the increase in PAD in Aceh Province. Increased capital expenditure, especially through DAK, is a key factor in encouraging PAD increase. The local government in Aceh Province needs to pay attention to strategies in managing DAU and DAK and allocating capital expenditure effectively to achieve higher PAD targets.

References

[List of references]

Limitations of the Study

This study has several limitations. Firstly, the study only examines the effect of DAU and DAK on PAD in Aceh Province, and does not consider other factors that may influence PAD. Secondly, the study uses a trimming pathway analysis method, which may not be suitable for all types of data. Finally, the study only examines the effect of DAU and DAK on PAD over a period of one, two, and three years, and does not consider the long-term impact of these variables.

Future Research Directions

Future research can consider other factors that influence PAD in Aceh Province, such as the quality of governance, investment climate, and potential natural resources. Research can also be done with a longer observation period to see the long-term impact of DAU, DAK, and capital expenditure on PAD. Additionally, research can be done to examine the effect of DAU and DAK on PAD in other provinces in Indonesia.
Frequently Asked Questions (FAQs) about the Effect of General Allocation Funds and Special Allocation Funds on Increasing Regional Original Revenues in Aceh Province

Q: What is the purpose of this study?

A: The purpose of this study is to examine the effect of General Allocation Funds (DAU) and Special Allocation Funds (DAK) on increasing Regional Original Revenues (PAD) in Aceh Province, with a focus on the role of capital expenditure as an intervening variable.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the effect of DAU and DAK on PAD in Aceh Province, which can inform policy decisions and strategies for increasing PAD in the province.

Q: What are the main findings of this study?

A: The main findings of this study are that DAK has a significant influence on capital expenditure, while DAU does not show a significant effect. In one year lag, DAU and capital expenditure are proven to have a significant influence on the increase in PAD, while DAK does not show a significant effect. In two years, DAU and capital expenditure again showed a significant effect on PAD, while DAK still did not show a significant effect. In three years, both DAU, DAK, and capital expenditure have been proven to have a significant influence on the increase in PAD.

Q: What are the policy implications of this study?

A: The policy implications of this study are that increasing the effectiveness of the distribution of DAK, increasing the role of DAU, and encouraging private investment can be taken to increase PAD in Aceh Province.

Q: What are the limitations of this study?

A: The limitations of this study are that it only examines the effect of DAU and DAK on PAD in Aceh Province, and does not consider other factors that may influence PAD. Additionally, the study uses a trimming pathway analysis method, which may not be suitable for all types of data.

Q: What are the future research directions?

A: Future research can consider other factors that influence PAD in Aceh Province, such as the quality of governance, investment climate, and potential natural resources. Research can also be done with a longer observation period to see the long-term impact of DAU, DAK, and capital expenditure on PAD.

Q: What are the practical implications of this study?

A: The practical implications of this study are that the local government in Aceh Province needs to pay attention to strategies in managing DAU and DAK and allocating capital expenditure effectively to achieve higher PAD targets.

Q: What are the implications for policy makers?

A: The implications for policy makers are that they need to consider the effect of DAU and DAK on PAD in Aceh Province and take steps to increase the effectiveness of the distribution of DAK, increase the role of DAU, and encourage private investment to increase PAD.

Q: What are the implications for researchers?

A: The implications for researchers are that they need to consider the limitations of this study and take steps to address them in future research, such as considering other factors that influence PAD and using alternative methods of analysis.

Q: What are the implications for the local government in Aceh Province?

A: The implications for the local government in Aceh Province are that they need to pay attention to strategies in managing DAU and DAK and allocating capital expenditure effectively to achieve higher PAD targets.

Q: What are the implications for the private sector?

A: The implications for the private sector are that they can take advantage of the opportunities provided by the increase in PAD in Aceh Province by investing in infrastructure and fixed assets.

Q: What are the implications for the community?

A: The implications for the community are that they can benefit from the increase in PAD in Aceh Province through improved infrastructure and services.