This paper attempts to determine the contribution of regional government spending in poverty. We review the dynamics process of development and poverty profile with sample case in Indonesia. We also examine the relationship between poverty ratesand the regional government spending. The observation is during the period of 1977 to 2010. In the estimation, we find that government quality have strong relationship with regional poverty dynamics. However, the government instruments represented by total spending and development spending are ineffective and have weak association in lowering poverty rates. We also find similar result when we include real government expenditure for salary and allowances in our analysis. This suggests that the effectiveness of government intervention should consider not only the various poverty programs, but fundamentally the quality of institutions.
|Title of host publication||Regional Development, Natural Resources and Public Goods in Indonesia During the Global Financial Crisis|
|Editors||MH Imansyah, BP Resosudarmo, Suryani, S Siregar, DS Priyarsono, AA Yusu|
|Place of Publication||Indonesia|
|Publisher||Indonesian Regional Science Association|
|Publication status||Published - 2013|