Analysis of Government Spending: The Transportation Sector and Economic Growth in Indonesia from 1986 to 2016
The main objective of this research is to examine the effect of government expenditures on the transportation sector and that effect on economic growth in Indonesia from 1986 to 2016. The research employed long time series data, utilizing the Ordinary Least Square (OLS) regression method to analyze the data collected. The data analyzed show that government expenditures on transportation as a physical capital and government expenditures on education as human capital significantly affect economic growth in Indonesia. On the contrary, the expenditures on housing and health indicated no contribution for national economic activity. This study recommended that government must ensure the budget for transportation development. The government must pay more attention to the allocation of the education budget for regions outside Java, by building educational facilities in areas that are still in the poor category that will improve their standard of living. Lastly, government should pay more attention to bureaucratic system specifically the procurement of goods and services and give punishment to those who divert and embezzle public funds.