Fiscal Decentralization and Regional Economic Growth: Evidence from the Tomini Bay Economic Corridor, Indonesia

Fiscal decentralization has received considerable attention as an instrument for improving regional autonomy and promoting local economic growth. But the effect of fiscal decentralization on regional economic growth is not also effective, especially in peripheral areas with weak financial capacity. AbstractThis study aims to analyze the potential impact of fiscal decentralization on regional economic growth in Sulawesi Tomini Bay Economic Corridor, Indonesia. Data This research use secondary data of ten regency and city in the region around Tomini Bay from 2015 to 2024, so as much as one hundred observations. The data was collected by using the regional government financial report, official statistics published by Indonesian Central Bureau of Statistics (BPS) and The Regional Budget Reports. This study examines the fiscal capacity of Australia's eighty-four Local Government Areas across three performance indicators using descriptive statistical averages: regional financial intermediate distance, fiscal efficiency ratio and social expenditure allocation on individual GRDP growth rates doing it The weighted reduction analysis is statistically significant. Most regions in the Tomini Bay area have a low level of fiscal independence, according to the results of this inquiry which reveals generally strong reliance on intergovernmental transfers from central government. In addition, some regions are missing the mark when it comes to both budgeting and spending of regional monetary resources. Nonetheless, regional fiscal decentralization remains crucial to promoting regional economic growth through activity-generating government expenditures that stimulate sectoral development. Nevertheless, there are structural constraints that limit the growth effects such as low local revenue and uneven sectoral development. The findings suggest that whilst policy efforts surrounding fiscal availability, budget performance and economic competitiveness the region could strengthen local adherence to developmental goals with respect to fiscal decentralization practices in emerging regional economies such as Tomini Bay.