ECONOMIC JOURNAL OF EMERGING MARKETS April 201 2 4(1) 52 -62

AUTONOMY POLICY AND SOCIAL WELFARE IN TANGERANG

Pitri Yandri Sekolah Tinggi Ilmu Ekonomi Maiji e-mail: [email protected]

Abstract

The paper analyze s the effect of public expenditure and the implementation of local autonomy pol- icy on Human Development Index (HDI). The paper uses Principal Component Regression Anal y- sis to conduct the analysis . The result shows that public expenditure has a positive effect on HDI . It also finds that the increase in HDI is bigger post the implementation of local autonomy policy. The elasticity of each coefficient of public expenditure are as follows: 1.58 for agriculture sector; 0.94 for education sector; 0.36 for health sector; 0.44 for housing sector; 0.61for infrastructure sector, and 0.70 for GRDP.

Keywords : Pu blic expenditure, Human Development Index , principal component analysis JEL classification number s: H40, H52, I21, I32

Abstrak

Penelitian ini mengkaji pengaruh belanja publik dan pelaksanaan otonomi daerah terhadap tingkat Indeks Pembangunan Manusia (IPM) di Kota Tangerang. Penelitian ini mengaplikasikan Analisis Regresi Komponen Utama untuk melakukan analisis . Hasil uji menunjukkan bahwa belanja publik memiliki pengaruh yang positif terhadap IPM . Lebih jauh, peningkatan IPM tersebut semakin besar setelah pelaksanaan kebijakan otonomi daerah. Penelitian ini juga menemukan tingkat e lastisitas per sektor terhadap belanja publik sebagai berikut: 1.58 pada sektor pertanian; 0.94 pada sektor pendidikan; 0.36 sektor kesehatan, 0.44 pada sektor perumahan; 0.61 pad a sektor infrastruktur, dan 0.77 untuk PDRB.

Keywords : Belanja publik , Indeks Pembangunan Manusia , analisis regresi komponen utama JEL classification number s: H40, H52, I21, I32

INTRODUCTION urban areas . In addition to the positive i m- pact of incr easing job opportunities, indus- Tangerang City is geographically very str a- trial employment also had a negative i m- tegic because it is the main support ing area pact , particularly externalities (waste, air for the capital city of and the next pollution, etc.) and the high rate of migr a- town to region. In the past , this city tion. BPS data of Tangerang City show was part of Tangerang District, then up- from the years of 2000-2007 that Tange r- graded to an administrative city, and finally ang City continues to experience popula- established as a municipality on February tion growth . The population increa ses from 27, 1993 under Law No. 2/1993 on the e s- 1.311.746 people in 2000 to 1.575.140 tablishment of Tangerang Municipality . people in 2007. In 2010 , this number in- The term “municipality” then replaced with creased to 1.797.715 people . But, the ma g- “city ” in 2001. nitude of migration flows are not followed As a result of the hinterland, Ta n- by enough jobs creation which ma de the gerang City faced the typical problems of problem becomes even more complex . Autonomy Policy and Social Welfare … (Yandri ) 53

These conditions clearly require a HDI value compared with other regions in comprehensive treatment of local gover n- Banten Province . The Value reached 75.5 ment. When population growth is not su p- in 2006. These values are at medium level poerted by the increase in necessary facil i- of HDI . However, particularly in the educ a- ties , welfare decreases . tion, the enrollment rate (APM) is on the Therefore , the economi st s agree that increase. But at each level of education, a more comprehensive measure is needed there are differences in APM . Junior high to measure how far development efforts school and senior high school is lower than have been achieved by a region . The mea s- the prima ry school. Th e value is 85.25 for ures of the success of development as fo l- primary school; 55.33 for junior high lows : (a) the level of income inequal ity , ( b) school; and 23.87 for senior high school. poverty reduction, and ( c) a decrease in the Therefore, a new development par a- unemployment rate . The third measure s of digm should be directed to the distrib ution, the success of the above if it is listened to growth and sustainability in economic deve l- more deeply toward the ultimate goal of opment. This new paradigm can ref er to what improving the social welfare . Increasing is called the second fundamental theorem of social welfare means poverty reduction. welfare economics that in fact the gover n- In addition, the United Nation (UN) ment can actually choose the expected goal also has form ulated an indicator of ec o- of economic equality through the transfer, nomic development, especially human d e- ta xation and subsidies (Rustiadi 2007) . velopment and poverty . Formulation of de- In addition, they agreed that the ef- velopment indicators is referred to as the forts to improve human development d e- Millennium Development Goals (MDGs), manded a thorough comprehensive handled which consists of eight indicators of which involv e inter -sector -linkages , inter - achievement of development, namely : (a) actor, and inter -resources . One of the ap- the elimination of poverty and hunger ; (b) proach es that have taken is autonomy and education for all; (c) gender equality ; (d) decentralization policy . In , auto n- resistance to infectious diseases ; (d) reduc- omy and decentralization policy framework tion in child mortality; (e) improving ma- has been set by law No. 32/2004 on R e- ternal health , ( f) the preservation of the e n- gional Governance and Law No. 33/2004 on vironment; (g) developing a global partner- Financial Balance between Central and L o- ship (Bappenas , 2007). cal Government . Of the eight indicators , there are With the implementation of this important sub-indicators of development, law , every region in Indonesia both provin- which is the Human Develo pment Index cial and dis trict government granted the (HDI ). HDI is composed of three comp o- authority to implement, including the allo- nents, namely the length of life measured cation of expenditure , especially capital by life expectancy at birth , ed ucational expenditure . Allocation of capital expendi- level was measured by a combination of ture is very important. Therefore, it co n- literacy rate in the adult population (with a tributes to the regional economy . This co n- two- thirds weight) and an average length of tribution takes place in two phases : the the school (with one third weight), and the short term through the expenditure of mat e- level of standard of living as measured by rial and labor absorption and in the long income per capita that has bee n adjusted term through the multiplier in the private (PPP dollars) . This index is simple average sector in the regional economy . of the three co mponents mentioned above. Study the impact of regional auto n- BPS data of Tangerang City showed omy has been widely performed and pro- that this region has achieved the highest duced varying conclusions. This conclusion

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suggests that the regional autonomy has a of 1992 -2008 used as secondary data . Data is concrete impact on the social welfare ( Us- processed by Min itab 15 . Specification of the man, 2005; Arifin , 2006, Rozi , 2007; He r- model used refers to Intan (2009) who found nawan , 2007). However, there is also a that those expendit ure s: agricultural (EP- negative outlook stating that autonomy and ERT ), education (EPDDK ), health decentraliz ation do not yet have a positive (EKSHTN ), housing (EPRM ) and infrastru c- impact on the social welfare ( Lewis, 2001; ture (EINFRA ) have a significant effect on Siregar , 2001; Elmi , 2005; Nanga, 2006, poverty reduction (Mk ) in Banten Province . Wilopo and Budiono, 2007). The model is as fo llows: Nevertheless, the normative fram e- work of autonomy and decentralization Mk t = αo + βo(EPERT it -k) + β1(EPDDK it -k) based on the argument that the manag e- + β2(EK SHTN it -k) + β3(EPRM it -k) ment of the public service units will be + β4(EINFRA it -k) + β5D1 + β6D2 more effective if delivered to the unit in + εt (1) direct contact with the community . The a s- sumption was that the closer of the rel a- In this study , the model is modified to : tionship between governments to the pub- HDI t= αo + β1(ln EPERT t) + β2(ln EPDDK t) + (ln EKSHTN ) + (ln EPRM ) lic , the public can understand the need for a β3 t β4 t + (ln EINFRA ) + (ln PDRB ) service (Wilopo and Boediono 2007). In Β5 t β6 t + β7Dotda + εt (2) other words, administrative decentraliz a- tion is intended to create efficiency and ef- Where HDI t is Human Development I n- fectiveness of public services . dex at time t (1994-2008) (in percent) ; However, the result of studies r e- lnEPERT is Agriculture expenditure at lated to the implementation of public se r- t time t (in rupiah); lnEPDDK t is Education vices in the era of autonomy and dec en- expenditure at time t (in rupiah); tralization has not shown satisfactory pe r- lnEKSHTN t is Health expenditure at time t formance . Toyamah et al . (2002) found that (in rupiah); lnEPRM is Housing expendi- after the implementation of autonomy and t ture at time t (in rupiah); lnEINFRA t is I n- decentraliza tion in the education se ctor, frastructure expenditure at time t (in health , and infrastructure services has not rupiah); lnPDRB is Regional Gross Do- changed , but the condition of facilities a nd t mestic Product (in rupiah); Dotda is Auto n- infrastructure services tend to deteri orate . omy Dummy (before autonomy = 0; after Bappenas and UNDP (2008) also found auto nomy = 1) ; and εt is error terms. that many local governments have not been Regional Gross Domestic Product optimally provide d basic services to the (RGD P) is inserted into the model with the public so that implies a level of welfare consideration that the RGDP is an indicator inequality in the region. Based on the result of prosperity of a region. The higher of of the study , this paper examines the effect RGDP , the higher prosperity of the co m- of public expenditure and the implementa- munity in a region. While decentraliz ation tion of auto nomy policy on social welfare dummy variable which estimated by the in Tangerang City . Social welfare on this public expenditure in this equation is given research is indicated on Human Develo p- the autonomy variable is an indicator var i- ment Index (HDI) . able . The results of ordinary least squares estimation is expected to show the relatio n- METHOD S ship and also predicted the influence of This study uses Princi pal Component Anal y- public expenditu re on HDI before and after sis (PCA) as a tool of analysis. Report of the implementation of regional autonomy Tangerang City Government Budget ( APBD ) in Tangerang City .

Autonomy Policy and Social Welfare … (Yandri ) 55

PCA is to transform the indepen dent mensions. This is done by removing the variables are correlated (multicollinea rity ) correlation between variables through the into new variables are orthogonal and un- variable transformation from the new var i- correlated . This is done becau se there are ables (principal components ) that are not indications of multicollinearity among in- correlated Gaspers (in Ulpah , 2006). dependent variables . Test results of the co r- By using the concepts of linear alg e- relation coefficient of independent var i- bra diagonal matrix , the correlation matrix R ables as shown in the T able 1. with dimension pxp, symmetric and non - Indications from the above table singular, can be reduced to a diagonal ma- multicollinearity occur in almost all the i n- trix D with initial multiplier and final mult i- dependent variables. The correlation be- plier orthogonal matrix V can be wri tten as : tween independent variables with a high level below 0.05 are: (1) the health with the V` R V = D (3) agricultural sector (r = 0.697, p -value = 0.003); (2) the health with the education λ1 ≥ λ2 ≥ … ≥ λp ≥ 0 is eigenvalue of the sector (r = 0.662, p-value = 0.005); (3) the matrix R which is a diagonal matrix el e- housing wit h the health sector (r = 0.881, p- ments of D, while the columns of v, v1, v2, value = 0.000); (4) the infrastructure with vp is eigenvector of R. The λ1, λ2, ... λp can agricultural sector (r = 0.814, p -value = be obtained through the following equation: 0.000); (5) the infrastructure with health sector (r = 0.856, p -value = 0.000), (6) the | R – λ I | = 0 (4) infrastructure with the housing sector (r = 0.835; p-value = 0.000), (7) the RGDP with with I is the identity matrix . The eigenvalue of agriculture sector (r = 0.882, p -value = of v 1, v2, ... vp can be obtained through the 0.000); (8) RGDP with health sector (r = following equation:

0.765, p -value = 0.001) ; (9) the RGDP with | R – λ I | vj = 0, housing sector (r = 0.852, p -value = 0.000) ; (10) RGDP with infrastructure sector (r = where vj = (v 1j , v2j ,…vpj ) (5) 0.954, p -value = 0.000); and (10) the Suppose a regression equation can be ex- dummy with the health , housing, infrastru c- pressed as following form : ture sector and RGDP . So PCA therefore aims to simplify Y = Xβ + ε (6) the variables observed by reducing its d i-

Table 1: Correlation Among Independent Variables IPM lnPERT lnPDDK lnKSHTN lnPRM lnINFRA lnPDRB lnPERT 0.625 0.010 lnPDDK 0.225 0.415 0.402 0.110 lnKSHTN 0.642 0.697 0.662 0.007 0.003 0.005 lnPRM 0.637 0.724 0.549 0.881 0.008 0.002 0.028 0.000 lnINFRA 0.799 0.814 0.401 0.856 0.835 0.000 0.000 0.124 0.000 0.000 lnPDRB 0.751 0.882 0.392 0.765 0.852 0.954 0.001 0.000 0.133 0.001 0.000 0.000 Dummy 0.663 0.598 0.467 0.862 0.860 0.892 0.806 0.005 0.014 0.068 0.000 0.000 0.000 0.000

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If an observation matrix X is denoted by Z economic , social, cultural and political . In have been standardized in order to obtain the economic dimension , the results of eigenvalue (λ) and eigenvector (V) of Z` Z studies on the influence and impact of (form correlation) and V' V = I because V autonomy and decentralization vary widely . orthogonal , from the regression equation On the one hand, the results of the study can be written as follows : stated that the policy of autonomy and d e- centralization have not shown satisfactory Y = Zβ + ε results . But on the other hand it states the Y = β01 + ZVV`B + ε opposite . Variati ons of this conclusion ap- Y = β01 + Wα + ε pears to depend on the region that became with W = ZV and α = V` β the case study is taken and the analytical W = Z V (7) tools used . The emergence of these vari a- W `W = (ZV) ` (ZV) = V`Z`ZV (8) tions may also state that conclusions have unequal impact of regional autonomy and Equation (8) will produce a diagonal (λ1, λ2 ... ) is equivalent to Var( W ) = and Cov( W decentralization polici es for each dis- λp i λ1 i- trict/city in Indonesia (Priyarsono, 2011) . 1, Wi) = 0. This suggests that the main co m- ponents are not correlated with each other For certain regions that have not felt and the principal components to-i have the the impact of certain policies of autonomy same variance eigenvalue to -i. While the and decentralization, the study Aziz (2009) variance of regression coefficient γ from m is can be cited . He stated that the main causes the principal component as fo llows : of failure of decentraliza tion lies “in the 2 lack of preparation and inappropriate poli- m a *2 ig cies , weak local accountability , widespread Var ()γi = s ∑ ,1=1,2,... p; g =1,2,... m (9) g=1 λg local capture, lack of voices or people 's participation, and absence of proper ince n- Where aig is a principal component weigh t- tive system for local leaders ”. ing coefficient (eigenvector), λg is eige n- value. While the s*2 is : In Tangerang City , the study found that the policy of autonomy and decentral i- 2 zation showed satisfactory results . That is, *2 MSE s (10) s = = autonomy and decentralization policy could SLS ()2 ∑ y − y encourage an increase in HDI higher than

before autonomy and decentralization. In wh ere MSE is Mean Square Error , and SLS is Sum Least Square . the public expenditure , each sector of e x- pen diture also showed significant results . RESULT S The results of estimation using principal component regression analysis as presented There are many studies on autonomy and in the table below. decentralization, both of the dimensions of

Table 2: Significance Analysis of Partial Regression Coefficients Variab le Standard Coef ficient t-value p-value (Xi) Deviations (γi) (γi) t( γi) lnEPERT (Rp) 0.028681303 1.528 53.25983 0.0000000 lnEPDDK (Rp) 0.02044137 0.949 46.43089 0.0000000 lnEKSHTN (Rp) 0.031771277 0.637 20.04263 0.0000000 lnEPRM (Rp) 0.031850507 0.445 13.96197 0.0000002 lnEINFRA (Rp) 0.032405118 0.613 18.93048 0.0000000 lnPDRB (Rp) 0.031850507 0.707 22.20618 0.0000000 Dummy 0.030820516 1.130 36.66204 0.0000000 Coefficient Determination: 52.4%.

Autonomy Policy and Social Welfare … (Yandri ) 57

Based on table above , the regression result leadership of . From the as- is as fo llows : pect of economic performance and social welfare , this region managed to have ec o- IPM = - 8.961 + 1.528 lnEPERT nomic growth above the national average + 0.949 lnEPDDK of 6.8% in 2008 and 7.1% in 2007 and thus + 0.637 lnEKSHTN succeeded in reducing the unemployment + 0.445 lnEPRM + 0.613 lnEINFRA rate above the national average of 20% in + 0.707 lnPDRB 2007 to 12% in 2008. + 1.130 Dummy (11) In addition, the local government

also managed to obtain an award (1) Award To test the assumptions of classical of Public Health Services in National Level test the validity of the model that includes in 2008; (2) BPKP Award 2008, (3) Le n- Normality Test , Homosc edastisit y and cana Bhakti in Education from the Pres i- Autocorrelation. The p -value of normality dent of RI in 2007 (48% education expen- test indicates 0.150 or > 5% then accept α diture of APBD) a nd (4) Piala Citra Abdi H means that the residual normal spread . In 0 Negara for the Best Public Service Na- the homosc edastisit y test , the p-value is tional Level in 2006. 0.9074 or > 5% then accept s H It means α 0. Specifically on aspects of the public that the variance of the residuals is hom o- expenditure and RGDP , the results also sc edasti sity. While the auto correlation test found that the coefficient of per sector of results indicate that there is no serial correl a- public expenditure and RGDP are signif i- tion between the disturbance variables e, or i cant. Although the agricultural sector has di sturbance variables e are not correlated i the lowest proportion of public expendi- with other variables e. This is indicated by i ture , but this sector significantly influenced p-value 0.1432 or > 5% then accept s H . It α 0 on HDI in this region. Its Elasticity is means ther e is no autocorrelation . 158.2%. That is, any increase in an amount From equation (11) above , shows that of public expenditure in the agricultural all coefficients of independent var iables are sector would increase the HDI by 158.2% positive . Positive slope indicates that all var i- in this region. The coefficient is even ables can estimate variance of HDI , with higher when compared with the coefficient each slope 1.582 for the agricu ltural , 0.949 of other public expenditure sectors . for education , 0.367 for health , 0.445 for Deductively , there are many studies housing , 0.613 for infrastructure, 0.707 for have linked and assumed the role of the a g- GD RP and 1.130 for dummy variable. Sp e- ricultural sector and to variou s indicators of cial on a dummy variable, estim ation results economic development . One is a study co n- indicate that the variable autonomy is able to ducted by Yudhoyono (2004) . He found that increase HDI in Ta ngerang City . Thus , the the agricultural sector could signif icantly public ex penditure can e xplain about 52.4 % promote sustainable economic growth and variance of HDI in this region . thus be able to lift people out of poverty . That is, autonomy and decentraliz a- When the economy grows , people have tion policy could encourage an increase in greater opportunities to gain access to HDI higher than before the policy . These sources of economic activity . That’ s when results re confirm the results of the study they can earn income to finance all its co n- Usman (2005), Arifin (2006), Rozi (2007), sumption needs . and Hernawan (2007). This estimation According to BPS, until August seems relevant to the empirical facts co n- 2008 the agricultural sector still contributes tained in Tangerang City . The data show, for about 40.3% in terms of em ployment. the region has a number of outstanding This means that when the agricultural se c- achievements during the development of

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tor to grow, then this sector can be a source In addition, the Report of Tange rang of economic growth . Moreover, in terms of City Government Budget (APBD) , expend i- its contribution to the formation of the ture on this sector is based on pr ograms that GDP, agriculture, animal husbandry , fo r- are directly in contact with the community . estry and fishery ranks second only t o Although the agricultural area is smaller manufacturing industries. Seeing this em- than the residential and industrial area , but pirical data , surely it is certain that the agri- the local government is able to formulate a cultural sector became an important sector number programs to encourage increased in national economic development, not agricultural in come of farmers . In the table least in Tangerang City . sub- above (table 4), reflected the program of a g- district is the region with the greatest po- ricultural sector in 2003, 2004 , 2006, and te ntial for agricultural land compared to the 2007 in APBD of Tangerang City . potential for other agricultural areas in the In the education , this sector has si g- sub-district of th e district . nificant coefficient which reached 94.9 %. However, in employment structure That is, any increase of al location in the ed u- by economic sector perspective, the agr i- cation sector will increase 94.9 % on HDI . cultural sector employment is smaller when Education is one of the three comp onents compared to the industrial sector, trade and contained in the HDI. The indicator is the services (formal or informal ). To illustrate literacy rate and average length of the school . the structure of employment, this is the fo l- The literacy rate is the percentage of people lowing economic sectors between years of aged of 15 and ov er can read and write . 1995-2005 in Tangerang City (Table 3) . The literacy rate in Tangerang City On average in Tangerang City, from was quite high at 97.10 (2005), 97.50 1995-2005 the structure of the agricultural (2006), and 97.53 (2007). This means that sector employment reached 2.78% of total more than 97% of the population aged 15 labor force . Labor force participation rate years and over was able to read and write , (LFPR) is large enough for a “city”. If it is and only about 2.5 % are illiterat e. Literacy to be compared with the Jakarta Province , programs is related to the 9-year compu lsory LFPR agriculture sector reached only education program , which means an i n- 1.025% in 2009 and 1.016% in 2010. crease in enrollment rate at primary school Looking at the empirical data , the strong and junior high school will also affect the presumption that the elastic of agricultural rate of literacy or illiteracy eradic ation . sector caused by the absorption fraction of labor to this sector.

Tabel 3: Structure of Employ ment by Economic Sector in Tangerang City Year 1995 -2005 (in %) Ec onomic Sectors (%) Years Agricu lture Mining Industry Formal Se rvices Informal Se rvices Others 1995 2.295 0.36 29.435 36.088 23.548 8.308 1996 1.723 0.268 25.258 36.486 26.782 9.482 1997 3.822 - 36.708 39.103 20.111 0.256 1998 2.139 0.223 30.503 47.075 20.061 - 1999 2.046 0.208 32.505 45.629 19.609 - 2000 2.015 0.205 32.749 45.629 19.609 - 2001 2.749 - 33.964 19.762 28.099 15.427 2002 2.746 - 33.778 19.762 28.099 15.471 2003 2.781 - 33.845 19.891 28.101 15.479 2004 2.767 - 33.978 19.913 28.137 15.489 2005 2.778 - 33.991 19.978 29.019 16.490 Source : Tangerang in Figures, BPS

Autonomy Policy and Social Welfare … (Yandri ) 59

Tabel 4: Agriculture Sector Program Components in the Structure of RGDP of Tangerang City : 2003, 2004, 2006 and 2007 Year Programs 2003 1. People's Agricultural Sector Program 2. Agricultural Business Development Program 3. Agribusiness Development Project (DAU) 4. Diversification Program for Food and Nutrition 5. Improved Food Security Project (DAU) 6. RPH Rehabilitation and De velopment Project of Bayur 2004 1. Diversification Program for Food and Nutrition 2. Agribusiness Development of Ornamental Plants and Vegetables 3. Food Security Program 4. Optimization of Agricultural Land 5. Development of Freshwater Aquaculture 6. RPH Rehabilitation an d Development Project of Bayur 2005 - 2006 Department of Agriculture program in 2006 as the program in previous years . 2007 1. Diversification and Food Security Program a. Making the well pump b. Bird flu disease controlled c. Handling health and welfare of animal sacrifice d. Procurement of breeding and fattening cattle 2. Agribusiness Development Program for Agriculture, Livestock and Fisheries a. TOGA development b. Horticulture agribusiness development c. Relief efforts of farmer groups d. Sheep enterprise development e. Increased marketing of ornamental fish f. Floating duck business g. Freshwater fish farming h. Manufacturing plant nurseries Agriculture (DAK) i. Maritime Affairs and Fisheries (DAK) Source : APBD of Tangerang City

Meanwhile , the average length of tional Program 9 Year Compulsory Educa- completed education is an av erage of how tion. The government’ s target of a min i- many years a resident to follow the educa- mum standard of education for the popula- tional process . The average length of co m- tio n of Indonesia is to finish junior high pleted education in this region experienced school. a significant increase in the average of Health sector, this variable is also 10.51 in 2005, 10.75 in 2006, and 10.77 in significant in encouraging an increase on 2007. In general, a person takes about 9 HDI with slope 63.7%. Positive slope years to complete primary school to junior means that for every 1 rupiah increase d in high school. Mean while , to get to the level the allocation of health sector will increase of senior high school takes about 12 years . 63.7% on HDI . In HDI , an indicator of lo n- Based on th is explanation, the average gevity can be expressed closely related to length of the population graduated in this public health . The longevity is a life to last region is 10.7 years . It mean s that in ge n- longer which measured by the indicators of eral the majority of the population co m- life expectancy at birth . plete d their education up to the level of ju n- The result of these estimates seems ior high school. This is in line with the N a- relevant to the exist ing empirical facts . One

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of the local government’s program s in o r- omission of a region in development is i n- der to provide basic health and education fluenced by many things. One is the low acces s for the poor is a Multi Use Card attractiven ess of a region that cau ses a low Program (Kartu Multi Guna/ KMG), which level of economic activity . A r egion does rolled out in 2008. KMG program is funded not have the resources (both h uman and 100% from APBD of the local government. natural ) and the lack of ince ntives offered In the residential or housing sector, (infrastructures, hardware and software , this variable is significant in encouraging security , etc.) can cause a region lagging in an increase on HDI with a slope 44.5%. It developmen t. means that every 1 rupiah increase in the Therefore, the impact of the low allocation of housing sector expenditure quantity and quality of infrastructure led to will increase 44.5% on HDI . Although it is a slowdown of economic growth and e m- not directly related to the HDI , housing is ployment. So finally there are a lot of co m- one of the primary needs of society. This panies going out of business or canceling corresponds well with the mandate of the expansion. So therefore, infrastructure constitution which stated that the house is plays an imp ortant role in the production one of the fundamental rights of the people process and an indispensable precondition and therefore every citizen has the right to to attract private sector capital accumula- reside and have a good environment and tion. In the context of HDI , it is certainly healthy. In addition, the house is also a ba- also a precondition for the improvement of sic human need in improving the dignity , HDI . Therefore, one component of HDI is quality of life and livelihood, as well as the standard of living and purchasing personal reflection in improving standards power parity ( PPP ). Improving living sta n- of living. dards and PPP can occur if and only if there According to the publica tion’s we b- is a chance to get a job. With a job means site of Tangerang City Government, appro- that people will earn income that could priate housing located in the region has i n- eventually buy all of their basic needs. This creased in each year . In the year of 2008 ( to logical thinking is also accordance with the March 2008) the number of appropriate results of data on the model . GD RP var i- housing in the region reached 286.411 ables significantly influence on HDI by units . T his number increased by 4 % from 70.7% which means an increase of 1 rupiah 2007. Conversely , the condition of the in- of GD RP will increase 70.7% on HDI . appropriate house is declined, where the At some points of the year , esp e- number of units that are not feasible in the cially after the implementation of auton- year 2008 ( until March 2008) as many as omy and decentralization polic ies , the issue 2037 units. Habitable residential ratio also of infrastructure is the focus of the accele r- showed a trend that is increasing every ated development of the region. This focus year . Looking at these conditions, the is implemented through the programs and availability of housing in the region is b e- activities contained in the public works and coming increasingly wide. It also means, transportation affairs . Business communi- the opportunity to obtain adequate housing cations is one of the vital public service in is also more broadly . moving the region’s economy. This sector In the infrastructure sector, the c o- serves to ensure the smooth flow of traffic efficient is approximately 61.3% and si g- of people and goods within the city and to nificantly affect s on HDI in the region, and from the region. For urban areas , infr a- which means that any increase in an structure also needs to be increase d. Ther e- amount of public sector infrastructure ex- fore, the infrastructure expenditure is one penditure will increase 61.3% on HD I. The of the important sectors . Hence also, in-

Autonomy Policy and Social Welfare … (Yandri ) 61

vestment in social -overhead such as co n- the HDI in Tangerang City . Therefore , ef- struction of roads, health facilities , educa- fective expenditure policy is important to tion and other infrastructure facilities can implement. However, it need s a more def i- be an alternative development. nite s imulation from the combination of the expenditure as an effort to encourage an CONC LUSION increase on HDI to a more tangible expen- diture . Autonomy and decentralization The variation in expenditure of agricultural , policies should be formulated as effectively education, health, housing and infrastru c- as p ossible to encourage an increase on ture , GD RP per capita , and regional auto n- HDI in this region. omy can explain 52.4% of the variation in

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