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JURNAL POLITIK PEMERINTAHAN DHARMA PRAJA

e-ISSN 2721-7043 ISSN 1979-8857


Website: http://ejournal.ipdn.ac.id/JPPDP
Faculty of Politics Governance, Institute of Home Affairs Governance (IPDN)

JPPDP, Vol 16 No. 1


Doi: https://doi.org/10.33701/jppdp.v16i1.3446

POLITICAL COMPETITION AND LOCAL REVENUE: HOW ARE THEY


RELATED? (CASE STUDY OF REGENCY/ CITY ON PAPUA ISLAND 2017-2021)

Isyatul Hazar Awaliyah¹, Aleknaek Martua²*, Elvis³, Zulkifli Hayatuddin4

¹ Magister Manajemen – Universitas Galuh, Indonesia


², 3, 4 Institut Pemerintahan Dalam Negeri, Indonesia
E-mail: issyatulhazarawaliyah@gmail.com, aleknaek@ipdn.ac.id, elvis@ipdn.ac.id, and
zulkifli@ipdn.ac.id

*coresponding author
E-mail: aleknaek@ipdn.ac.id

Abstract
Democracy today is very important because all citizens are given relatively equal rights in
making decisions that can change their lives for the better. Some previous studies have shown
that the amount of allocated funds distributed tends to correlate with areas that have been
controlled by the party that is currently in control of the government. This study will focus on
examining the impact of political concentration on the allocation of DAU and DAK, which will
indirectly impact PAD. This research uses quantitative analysis of secondary data with the
object of researching all districts and cities in Papua Province and West Papua Province in the
period 2017-2021. The analytical method used in this research is multiple linear regression
analysis. The results found in this study are that there is a positive correlation between HHI
and DAU per capita and DAK per capita. However, in statistical testing, the effect of HHI does
not appear to be significant on PAD per capita within a district/city area in Papua Province
and West Papua Province.
Keywords: Political Competition, Budget Politics, Political Economy, and PAD

Abstrak
Demokrasi pada masa kini menjadi sangat penting karena semua warga negara diberikan hak
yang relatif sama dalam pengambilan suatu keputusan yang dapat mengubah hidup layak dan
lebih baik. Beberapa penelitian terdahulu menunjukan hasil bahwa sejumlah dana alokasi yang
dibagikan cenderung berkorelasi dengan wilayah yang telah dikuasai oleh partai yang saat itu
sedang menguasai pemerintahan. Penelitian ini akan fokus untuk mengkaji dan meneliti dampak
dari konsentrasi politik terhadap pengalokasian DAU dan DAK yang secara tak langsung akan
berdampak terhadap PAD. Penelitian ini menggunakan analisis kuantitatif terhadap data
sekunder dengan objek peneliltian seluruh kabupaten dan kota di Prov. Papua dan Prov. Papua
Barat pada periode Tahun 2017-2021. Metode analisis yang digunakan dalam penelitian ini
adalah analisis regresi linier berganda. Hasil yang ditemukan dalam penelitian ini adalah

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adannya korelasi positif antara HHI terhadap DAU per kapita dan DAK per kapita. Namun
dalam pengujian statistika, pengaruh dari HHI tidak terlihat secara signifikan terhadap PAD per
kapita di dalam suatu wilayah kabupaten/ kota di Prov. Papua dan Prov. Papua Barat.

Kata Kunci: Kompetisi Politik, Politik Anggaran, Ekonomi Politik, PAD

INTRODUCTION and the right to run for office, this document


Today, democracy has become establishes universal suffrage. To date, it
crucial because all citizens have relatively has been established that political parties
equal rights to make life-improving recruit members who are entrusted by the
decisions. Papua and West Papua, elected group to become members of the
provinces of the Papua island region that DPR/DPRD and who carry out their
have long practiced democracy and regional responsibilities in accordance with the
autonomy, are also democratic and articles of association. So it can be stated
autonomous. Until now, the provinces of that the DPR/DPRD has responsibilities
Papua and West Papua have implemented that must be carried out in accordance with
democracy through general elections. the desires and aspirations of the
Papua and West Papua provinces have been community.
holding democratic elections for some time. The implementation of the
Parties are required by election laws and government decentralization program and
regulations to nominate candidates for the transfer of government affairs to
House of Representatives (DPR) seats, regional leaders must be followed by the
provincial DPRD seats, and district/city proper regulation, distribution, and
DPRD seats. Consequently, DPR and utilization of public resources. Such
DPRD members are automatically elected agreements include financial balance
from political organizations. agreements between the central and
As it is now practiced, democracy is regional administrations. Currently, DAU
a political system in which the people, as and DAK are derived from APBN revenues
the most sovereign group, participate in the allocated to municipalities by the state. In
process of filling political positions. To contrast, PAD is defined as revenue
assure the efficacy of democracy, a collected through regional regulation and in
mechanism is created to include the accordance with regional law. The
populace in the process of filling political existence of PAD is influenced directly or
positions. As an instrument for realizing indirectly by DAU and DAK of the central
political liberties such as the right to vote government via APBN. The graph below

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illustrates the distribution of DAU and (Source: https://djpk.kemenkeu.go.id)
Due to the small number of districts
DAK funds in Papua Province:
and cities in West Papua, the DAU and
DAK fund allocations in West Papua
Province are relatively small.
Several cases indicate that the
allocation of intergovernmental funds is
still heavily influenced by political
considerations, as shown by research
conducted in various regions both
Figure 1. DAU and DAK Papua Province
nationally and internationally. (Rezki,
Year 2017-2021 (Milyar Rupiah)
(Source: https://djpk.kemenkeu.go.id) 2022). In a number of similar studies
conducted in the United States, the results
Geographically, Papua Province has
indicate that a greater proportion of
a greater proportion of land compared to
allocation funds distributed in the United
West Papua Province. Due to the large
States region tend to go to states that have
number of regencies and localities in Papua,
been governed by the party that presently
Papua Province receives a larger allocation
controls the United States Congress.
of DAU and DAK funds than West Papua
According to the research, political
Province. Considering the ratio between
competition and electoral participation can
DAU and DAK, it is obvious that the DAU
affect the effectiveness of governance ().
allocation in a province is greater than the
(Marín et al., 2021).. Current data indicates
DAK allocation. In the meantime, the
that raised political power can influence
distribution of DAU and DAK in all
economic resources and access, particularly
districts and localities of West Papua
in terms of policy (Woldesenbet, 2020).
Province is as follows:
(Woldesenbet, 2020). During legislative
meetings, political competition can
reconcile the provision of public goods
(Gottlieb, 2018). A general study on
political factors and the allocation of
intergovernmental funds in Indonesia
revealed a negative and significant
relationship between the proportion of seats
figure 2. DAU and DAK West Papua Province
held by a particular party and the DAU
Year 2017-2021 (Billion Rupiah)

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allocation per capita received by each The stability of social, political,
region in the province, strengthening the cultural, and economic conditions in the
argument that political factors do not two provinces are directly related to the
influence the allocation of DAU funds. It is majority of political parties in each district
possible for a party to concentrate its and city. In Papua and West Papua
political capital in the regions in order to Provinces, the function of political parties
strengthen and support the legislature over in sustaining democracy varies from
an extended period of time. This research city/district to city/district. This research
applies to political economy, in which will examine the influence of political
political authority is sometimes required for concentration on the distribution of DAU
a group to access economic resources and and DAK. In addition to the perceived
conduct economic activities in a region. inequality in some regions of Indonesia,
(Nurwanda et al., 2021).. Although the regional leaders believe that the allocation
economic costs and benefits of political of DAU and DAK funds is inequitable in
competition are frequently discussed due to some regions. At this time, it is conceivable
their complexity, this is not always the case for political power to influence the
(Bardhan, 2014). In recent decades, allocation of transfer funds from the central
political power can occasionally alter the government to local governments. (Tobing
economic order and determine economic & Brodjonegoro, 2013).. This is due to the
activity policies (Potabuga, 2015). fact that there is a struggle of
Papua and West Papua Provinces are interest between groups of actors in the
currently the center of the government's political elite as a result of conflicts of
attention, with central government funds interest between groups in determining
and autonomy funds being prioritized for policies, particularly in the budget sector
their development. Therefore, it can be (Wance, 2015). (Wance, 2015). Political
stated that the social, political, economic, actors in the legislature determine the pro-
and cultural stability of these two provinces poverty, pro-employment, or pro-growth
must be maintained in order to support the orientation of economic policy. (Tawiah &
growth and empowerment of the local Karungi, 2020).. The determination of these
communities. (Kristiyanto et al., 2022) The policies affects all economic actors and can
issue of linking political stability with influence the behavior of business actors,
economic development is a classic issue including entrepreneurs and the private
that is the focus of attention and the concern sector. (Laiprakobsup, 2019; Magwedere &
of every region today. Marozva, 2023). If the research data

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indicates a relationship between political the HHI. (Rezki, 2018). This study assumes
concentration and the allocation of DAU that the allocation of DAU and DAK for the
and DAK in Papua Province and West period 2017-2021 does not completely
Papua Province, then the impact of political utilize the applicable mechanism, or that
concentration and the allocation of DAU certain regions may receive additional
and DAK on PAD in Papua Province and allocations. This study also employs the
West Papua Province must also be ceteris paribus principle, which implies all
empirically examined. Some regions have variables outside the scope of the study are
strong administrations supported by constant. Examining the relationship
political parties, allowing for more optimal between political concentration and the
economic growth-promoting policies. allocation of funds in each district / city in
(Sugiyanto et al., 2013).. Political Papua Province and West Papua Province,
competition should be given significant which has an effect on local revenue in that
consideration because it enables regional location, is of interest in the discussion of
leaders to administer government more the researcher's article. This research aims
effectively (Oktaviani & Arza, 2013). to investigate and analyze the relationship
(Oktaviani & Arza, 2020).. The research's between political competition in the
problem formulations include determining cities/districts of Papua Province and West
the degree to which the concentration of Papua Province and the budget allocation,
political parties in a city/district in Papua particularly DAU and DAK, and to examine
Province and West Papua the empirically demonstrated relationship
Province influences the allocation of DAU between political competition and PAD.
and DAK, and the extent to which the
growth of DAU and DAK contributed to the METHOD
growth of PAD in cities/districts in Papua This research technique applies
Province and West Papua Province. Mixed method with a sequential / gradual
Political competition within a mixed method approach that prioritizes
district/city is measured by the HHI, the quantitative analysis and then focuses on
Herfindahl Hirschman Index. This index qualitative analysis of the quantitative
can represent economic, social, and findings. Sequential explanatory strategy is
political competition within a region. employed by the mixed method. This
(Natálie et al., 2022).. This study measures research uses descriptive quantitative
political concentration by calculating the methods and inference statistics with
proportion of each party in the DPRD using secondary data for quantitative methods.

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The obtained secondary data will be times. The period covered by these research
empirically analyzed using multiple data is 2017 to 2021. This study provides an
regression analysis. After that, in-depth overview of the relationship between the
interviews with designated sources will be variables of political concentration and
conducted. PAD across multiple time periods. After
General Allocation, Special obtaining the anticipated data in accordance
Allocation, HHI (Political Competition), with the variables required for the study, the
GRDP Per Capita, Regional Primary data are analyzed using inferential
Income, Land Area, Population, Human statistical methods.
Development Index, and Construction Cost
Index are the variables utilized in this study. RESULTS AND DISCUSSION
This research uses political economy Balance Fund Allocation Mechanism
theory, which emphasizes that political In order to realize a relative,
variables tend to have a significant impact democratic, fair, and transparent financial
on the economic dynamics of a country. balance system based on the division of
This research makes use of secondary data, power from the center to the regions, the
which is data that already exists from a Financial Balance Law No. 33 of 2004 on
variety of sources and is ready to be Financial Balance Between the Central
processed in order to test the hypothesis that Government and Regional Governments
has been determined using multiple was enacted as a refinement of Law No. 25
methods. This research utilizes secondary of 1999 on Financial Balance Between the
data from various sources, including the Central Government and Regional
Ministry of Finance and the BPS, which are Governments. The improvement of this law
analyzed and checked for accuracy. In includes the establishment of the
addition to literature reviews and interviews fundamental principles of the state and local
that provide additional information about government financial balance system in
the various concepts that serve as the basis accordance with the principles of
or guidelines for this research process. This decentralization, decentralization, and
study uses panel data, a combination of time shared administrative responsibilities. In
series data and cross sectional data, as its addition, the type of geothermal mining
quantitative data source. In this revenue sharing fund that was formerly a
investigation, panel data are obtained from special allocation fund category was
repeated cross-sectional observations of the converted into a revenue sharing fund, and
same unit object at relatively different the allocation principles of the General

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Allocation Fund and Special Allocation budget capacities. The fundamental share is
Fund were revised. calculated based on the total compensation
The Balancing Fund is a pool of of regional officials. The regional financial
funds allocated from APBN revenues that requirements are the regional financial
are allocated to regions to finance regional needs required for the execution of the
requirements within the context of primary functions of public services. Each
decentralization implementation. The subsequent funding requirement is
balance fund consists of three parts: the determined by population, area,
Revenue Sharing Fund, the General construction costs, regional per capita gross
Allocation Fund, and the Special Allocation domestic product, and the human
Fund. Revenue-sharing funds are funds development index. Due to the capabilities
derived from APBN revenues that are of regional fiscal policy, regional funding
distributed proportionally to the regions to sources consist of regional own-source
finance decentralization-related regional revenues (PAD) and revenue-sharing funds.
requirements. In addition, the General Until now, the calculation of public
Allocation Fund (DAU) is a fund derived financial requirements and fiscal policy
from APBN revenues that are distributed capacity has been the responsibility of
equitably to finance the financial government statistical agencies and/or state
capabilities of regions in order to finance authorities with the authority to publish
regional requirements in the context of responsible information. The DAU share
implementing decentralization. In the between provinces and
meantime, the Special Allocation Fund districts/municipalities is calculated by
(DAK) is a fund derived from APBN comparing the weight of government affairs
revenues allocated to particular regions and that come under the jurisdiction of
is intended to help finance special activities provinces and districts/municipalities. The
that are consistent with regional and ratio of provincial DAU to
national priorities. district/municipal DAU is 10% (ten) to 90%
The General Allocation Fund (ninety) when calculating the
(DAU) is set at a minimum of 26% (twenty- unquantifiable portion.
six percent) of net national income as
determined by the APBN and is distributed
based on fiscal gaps and baselines. The
previously mentioned budget shortfall is the
demand for state funds in excess of regional

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Table 1. List of Political Concentration in Districts/Muncipalities of Papua Province and West
Papua Province
Description Province List of District/Cities
Asmat district, Biak Numfor district, Boven Digoel district, Deiyai
district, Dogiyai district, Intan Jaya district, Jayapura district,
Jayawijaya district, Keerom district, Yapen Islands district, Lanny
Jaya district, Mamberamo Raya district, Mappi district, Merauke
Papua
Unconcetrated district, Paniai district, Puncak district, Puncak Jaya district, Sarmi
(HHI < 0,15) district, Supper district. Mappi, Merauke, Mimika, Nabire, Nduga,
Paniai, Puncak, Puncak Jaya, Sarmi, Supiori, Tolikara, Waropen,
Yahukimo, Yalimo, and Jayapura City.
West Fakfak district, Manokwari district, South Manokwari district,
Arfak Mountains district, South Sorong district, Tambrauw district,
Papua
Teluk Wondama district, and Sorong city.
Intan Jaya district, Central Mamberamo district, Nduga district,
Moderate Papua Paniai district, Bintang Mountains district, Puncak Jaya district,
Tolikara district, and Yalimo district.
Concentration
West Kaimana district, South Manokwari district, Maybrat district, Raja
(0,15≤HHI<0,25) Ampat district, Sorong district, South Sorong district, Tambrauw
Papua
district, and Teluk Bintuni district.
High Papua Kab. Asmat and Kab. Mamberamo Tengah
Concentration West
Raja Ampat District
(HHI ≥ 0,25) Papua
(Source: Processes)
Political Competition Analysis high political competition. Included in these
Table 1 contains an analysis of the districts are the Asmat, Central
variables of political competition in each Mamberamo, and Raja Ampat regencies.
district and city of Papua Province and West Table 1 explains that the distribution of
Papua Province. The distribution of political concentration is dispersed across
political competition across all districts and multiple districts and cities, indicating that
communities in the two provinces varies the results acquired after calculating the
between a level of no concentration and a index of HHI for each party membership in
level of moderate concentration. Based on DPRDs and putting them into categories are
the results of the analysis of the HHI index as shown in Table 1. Less competition
presented in Table 1 above, it has been exists between party cadres in a DPRD with
determined that a higher concentration increasing political concentration. This
indicates comparatively less political induces coordination, which is likely to
competition. According to the category, produce outcomes that are detrimental to
three (three) districts in the provinces of the community.
Papua and West Papua exhibit relatively

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Figure 1. Scatter Plot of DAK per capita, HHI, IPM and Population of Districts/Cities
(Source: Processed)
Figure 1 explains the relationship low DAK revenue per capita. The general
between the HHI index and DAK per capita. linear model depicted in Figure 1 reveals
The greater the size of the circle in the that the value of DAK per capita in a
graph, the greater the HDI in the district/city district/city area is linearly correlated with
compared to other regions. In the meantime, the HHI, which indicates political
the color within the circle is more yellow if competition. In particular, when allocating
the HDI in a district/city is higher, and it is DAK, the government prioritizes funding
bluer if it is lower. regions with low economic and social
In Figure 1, the relationship indices. Consequently, localities with low
between HHI and DAK per capita is shown economic and social index values will have
to be positive. Therefore, the higher the an effect on the allocation of substantial
HHI, the more likely it is that the per capita funds. According to the data, the district
value of DAK will increase. The high HHI that obtains the most DAK per capita is
depicted in the preceding graph allows for Tambrauw.

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Figure 2. Scatter Plot of DAU per capita, HHI, IPM and Population of Districts/Cities
(Sources: Processed)

Figure 2 demonstrates the et votes and regional budget


correlation between the HHI index and the allocations. Maintaining votes in a region in
DAU per capita. A high HHI indicates that order to enhance the loyalty of a particular
minimal political competition will likely party is one of the many objectives of
result in a high DAU per capita. The greater determining allocations to specific regions.
the size of the circle in the graph, the higher In the meantime, another strategy is to
the HHI in the district/city relative to other increase the composition of community
regions. The color of the circle indicates loyalty in areas where certain parties are
that the HDI in a district or city is higher if relatively lacking.
it is yellow and lower if it is blue. A positive increase in the value of
In general, many political strategies DAU and DAK in a region with low
according to existing studies show that high political competition will directly and
political party concentration can determine indirectly increase the quantity of PAD in
policy at the executive level. According to that region. This is because DAU and DAK
numerous sources, the large concentration in a region influence the PAD components.
of political parties can influence budg

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Table 2. Hypothesis for the PAD per Capita Model
Papua Province and West Papua Province
(Source: Processed)

Variables Model 1 Model 2


0.991 0.212
HHI
(1.624) (0.51)
0.006
IPM
(1.36)
-0.0002
IKK
(-0.67)
0.0000001
Area
(0.4)
0.002***
PDRB/ Capita
(4.66)
0.0000004
Total Population
(0.67)
0.0025
DAU/ Capita
(0.36)
0.0157
DAK/ Capita
(0.89)
0.0007
Ddes/ Capita
(0.04)
-0.029*
DBH/ Capita
(-1.69)
0.278*** -0.184
Cons
2.848 (-0.51)
R-Squared (Overall) 0.012 0.576
Chi Square 2.639 82.77
Prob (Chi Square) 0.104 0.000
Observasi Total 210 164
Notes: * signifikan at α = 10%, ** significant at α = 5%, and *** significant at α = 1%,

According to the analysis presented variable HHI and the dependent variable
in Table 2, political competition, as PAD per capita. The findings indicate that
measured by HHI, has no significant and HHI has no significant effect on PAD per
indirect effect on PAD in a number of capita within a district or city in Papua
districts/municipalities in the provincial Province and West Papua Province.
areas Papua. Although descriptive analysis Model 2 explains the relationship
indicates that HHI has a positive correlation between HHI as an independent variable
with DAU per capita and DAK per capita, and other variables as its supporters in
this correlation is not statistically relation to its influence on the dependent
significant. In Model 1, it is explained that variable, PAD per capita. In conclusion,
the model contains only the independent HHI has no appreciable effect on PAD

35
incidence per capita. Ministry of Finance with other
GRDP per capita is the variable that agencies regarding the availability of
has an effect on PAD per capita. This is fundamental data for DAU calculation.
reasonable given that a larger economy will 2. The technical stage, where a simulation
result in elevated PAD across all regions. of the DAU calculation is made, is
Additionally, the component of balancing consulted by the central government to
funds that influences PAD per capita is the DPR on the basis of calculations in
revenue sharing funds (DBH) per capita, accordance with the DAU formulation
which correlates negatively with PAD per 3. In the final stage, the government and
capita. The provided data indicates that, on the Regional Expenditure Working
average, districts/municipalities in the Committee of the Budget Committee of
provinces of Papua Province and West the DPR discuss the calculation and
Papua Province with high revenue-sharing allocation of the DAU for consultation
funds have a comparatively small economy. and approval of the DAU calculation
This is a result of high produce yields in results. During this final phase, it is
remote regions with a relatively weak possible to negotiate alterations to the
economy. Consequently, the analysis DAU formulation based on the
demonstrates that high revenue sharing is a conditions and requirements of the
result of high crop revenues, but that it does region and the availability of
not necessarily substantially improve the government funds.
local economy, which will have an effect on Depending on the mechanism
PAD in the region. The negative correlation governing the amount of DAU and DAK
indicates that the revenue sharing funds allocations, it is conceivable that an
(DBH) obtained by a number of increase will occur if an additional DAU
regencies/cities decrease as PAD increases. occurs in 2019. Another possibility exists if
According to the findings of interviews there are near-term strategic government
conducted in BAKD Papua Province, the initiatives to be implemented in multiple
current mechanism for calculating DAU regions that are tailored to the availability of
(General Allocation Fund) consists of central funds. Currently, the quantity of
several stages. DAU allocated to each city or region
1. The first stage, which is academic and exceeds the amount of DAK received. In
administrative, is the preparation of order for the regions to continue focusing
policies on the implementation of the on DAU revenue, as it is still the primary
DAU formula, coordinated by the revenue compared to DAK. The increase in

36
DAU and DAK in a region should have results despite having a positive correlation
direct and indirect effects on the prevalence in 2021. In this case, it is determined that
of PAD in that region. there is no strong and significant
relationship between political competition
CONCLUSION and PAD in a province/city in Papua and
This research found that some
West Papua. This study makes two
districts have relatively small populations
assumptions regarding the effect of political
relative to others, and that some regions
competition on a number of DAU and DAK
have high HDIs relative to other regions,
allocations, as well as direct and indirect
but receive relatively large allocations of
effects on PAD. The first assumption is that,
general funds or special allocation funds.
from 2017 to 2021, the government did not
The Mimika district, Merauke district,
entirely implement the determined
Asmat district, and Boven Digoel district
calculations for determining DAU and
represent this. This demonstrates that
DAK. Another assumption is ceteris
variables other than IKK (Construction
paribus, which states that variables outside
Cost Index), HDI (Human Development
of the research variables are considered
Index), Population (People), Area (km2),
constant and do not influence the research
and GRDP (in Billion Rp) can determine
variables in the model. Currently, the
the magnitude of the allocation for DAK or
calculation of the DAU (General Allocation
DAU.
Fund) involves multiple stages. In the initial
The results of the descriptive analysis
stage, which is academic and
conducted to examine the relationship
administrative, the Ministry of Finance
between political concentration and funding
coordinates with other agencies related to
allocations, both DAU and DAK, indicate
the availability of fundamental data for
that there is a positive correlation between
DAU calculation policy formulation on the
high political concentration and the absence
implementation of the DAU formula. After
of political competition within the DPRD in
this is accomplished, the technical stage is
all districts and cities in the Provinces of
carried out, during which a simulation of the
Papua and West Papua to DAU per capita
DAU calculation is carried out, which is
and DAK per capita.
then consulted by the central government to
The results of further empirical analysis
the DPR based on calculations in
conducted between political competition
accordance with the DAU formulation. In
and the amount of PAD within
the concluding stage, the government and
districts/municipalities show insignificant
the Regional Expenditure Working

37
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(2021). Political competition ,
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electoral participation and local fiscal
calculation and allocation of DAU for performance. Development Studies
Research.
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