Map to prosperity: Natural resource revenue sharing and infrastructure development in Indonesia
Vol 8, Issue 11, 2024
VIEWS - 776 (Abstract)
Abstract
The well-being of society can be realized through meeting basic needs, one of which is providing public infrastructure. This study examines the role of Natural Resource Revenue Sharing Funds (DBH SDA) on government investment in infrastructure in 491 regencies/cities in Indonesia. The testing in this research uses panel data regression analysis. The results show that per capita DBH SDA in Indonesia during the study period of 2010–2012 has a significant and positive influence on government investment in infrastructure. The selection of this period is based on the consideration that a resources boom has occurred, where there is an increased global demand for natural resource commodities followed by an increase in commodity prices, thereby positively impacting revenue for countries or regions abundant in natural resources. Despite DBH SDA having a significant and positive influence, regional spending on infrastructure tends to be more influenced by central government transfers such as General Allocation Fund (DAU), Special Allocation Fund (DAK), and Local Own-source Revenue (PAD). It was found that government investment in infrastructure tends to be influenced by transfer funds, indicating that the role of the central government remains significant in determining the infrastructure expenditure of regencies/cities in Indonesia.
Keywords
Full Text:
PDFReferences
- Adomako, S., Danso, A., & Boateng, A. (2023). Corporate Sustainability in Africa. In: Palgrave Studies in African Leadership. Springer International Publishing. https://doi.org/10.1007/978-3-031-29273-6
- Aguirre Unceta, R. (2021). The economic and social impact of mining-resources exploitation in Zambia. Resources Policy, 74, 102242. https://doi.org/10.1016/j.resourpol.2021.102242
- Ahmed, Z., Asghar, M. M., Malik, M. N., et al. (2020). Moving towards a sustainable environment: The dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China. Resources Policy, 67, 101677. https://doi.org/10.1016/j.resourpol.2020.101677
- Álvarez, R., & Vergara, D. (2022). Natural resources and educational attainment: Evidence from Chile. Resources Policy, 76, 102573. https://doi.org/10.1016/j.resourpol.2022.102573
- Aman, J., Abbas, J., Shi, G., et al. (2022). Community Wellbeing Under China-Pakistan Economic Corridor: Role of Social, Economic, Cultural, and Educational Factors in Improving Residents’ Quality of Life. Frontiers in Psychology, 12. https://doi.org/10.3389/fpsyg.2021.816592
- An, H., Razzaq, A., Nawaz, A., et al. (2021). Nexus between green logistic operations and triple bottom line: evidence from infrastructure-led Chinese outward foreign direct investment in Belt and Road host countries. Environmental Science and Pollution Research, 28(37), 51022–51045. https://doi.org/10.1007/s11356-021-12470-3
- Appiah, M., Onifade, S. T., & Gyamfi, B. A. (2022). Building Critical Infrastructures: Evaluating the Roles of Governance and Institutions in Infrastructural Developments in Sub-Sahara African Countries. Evaluation Review, 46(4), 391–415. https://doi.org/10.1177/0193841x221100370
- Arellano-Yanguas, J. (2018). Extractive industries and regional development: Lessons from Peru on the limitations of revenue devolution to producing regions. Regional and Federal Studies, 29(2), 249–273. https://doi.org/10.1080/13597566.2018.1493461
- Azolibe, C. B., & Okonkwo, J. J. (2020). Infrastructure development and industrial sector productivity in Sub-Saharan Africa. Journal of Economics and Development, 22(1), 91–109. https://doi.org/10.1108/jed-11-2019-0062
- Cacciuttolo, C., Guzmán, V., Catriñir, P., et al. (2024). Sensor Technologies for Safety Monitoring in Mine Tailings Storage Facilities: Solutions in the Industry 4.0 Era. Minerals, 14(5), 446. https://doi.org/10.3390/min14050446
- Chapman, D. (2002), Corruption and the Education Sector. USAID. pp. 1-25.
- Chen, K., Li, Q., Shoaib, M., et al. (2024). Does improved digital governance in government promote natural resource management? Quasi-natural experiments based on smart city pilots. Resources Policy, 90, 104721. https://doi.org/10.1016/j.resourpol.2024.104721
- Chile, N. I., Uzoechina, B. I., Eze, M. A., et al. (2021). Does the Abundance of Natural Resources Crowd-Out the Manufacturing Sector? Evidence from Nigeria. Asian Development Policy Review, 9(3), 108–126. https://doi.org/10.18488/journal.107.2021.93.108.126
- Crook, R. C. (2003). Decentralisation and poverty reduction in Africa: the politics of local–central relations. Public Administration and Development, 23(1), 77–88. Portico. https://doi.org/10.1002/pad.261
- Daulay, A., Yusuf, M., & Maipita, I. (2021). Analysis of Regional Disparity Among Regencies/Cities and the Correlation with Economic Growth North Sumatera in 2010-2019. In: Proceedings of the International Conference on Strategic Issues of Economics, Business and, Education (ICoSIEBE 2020). https://doi.org/10.2991/aebmr.k.210220.009
- Dinga, G. D., Mama, N., & Achuo, E. D. (2024). Resource abundance: Blessing or curse? Comparative analyses of point and diffuse resources. Heliyon, 10(3), e25078. https://doi.org/10.1016/j.heliyon.2024.e25078
- Du, Y., Zhou, J., Bai, J., et al. (2023). Breaking the resource curse: The perspective of improving carbon emission efficiency based on digital infrastructure construction. Resources Policy, 85, 103842. https://doi.org/10.1016/j.resourpol.2023.103842
- Duek, A. and Rusli, R. (2010). The natural resources industry in decentralised Indonesia: how has decentralisation impacted the mining, oil and gas industries? Available online: http://fdef.uni.lu/index.php/fdef_FR/economie/crea (accessed on 1 August 2024).
- Duque, E. A., González, J. D., & Restrepo, J. C. (2016). Developing Sustainable Infrastructure for Small Hydro Power Plants through Clean Development Mechanisms in Colombia. Procedia Engineering, 145, 224–233. https://doi.org/10.1016/j.proeng.2016.04.066
- Eisenmenger, N., Pichler, M., Krenmayr, N., et al. (2020). The Sustainable Development Goals prioritize economic growth over sustainable resource use: a critical reflection on the SDGs from a socio-ecological perspective. Sustainability Science, 15(4), 1101–1110. https://doi.org/10.1007/s11625-020-00813-x
- Ellalee, H., & Al-Qaysi, I. I. (2023). Digital Government a Pathway to Sustainable Development. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4508819
- Fu, R., & Liu, J. (2023). Revenue sources of natural resources rents and its impact on sustainable development: Evidence from global data. Resources Policy, 80, 103226. https://doi.org/10.1016/j.resourpol.2022.103226
- Guo, W., Yang, B., Ji, J., et al. (2023). Abundance of natural resources, government scale and green economic growth: An empirical study on urban resource curse. Resources Policy, 87, 104303. https://doi.org/10.1016/j.resourpol.2023.104303
- Han, J.-S., & Lee, J.-W. (2020). Demographic change, human capital, and economic growth in Korea. Japan and the World Economy, 53, 100984. https://doi.org/10.1016/j.japwor.2019.100984
- Hidayat, B. A., Supartoyo, Y. H., Setiawan, S., et al. (2024). Government infrastructure investment stimulation through booming natural resources: Evidence from a lower-middle-income country. PLOS ONE, 19(5), e0301710. https://doi.org/10.1371/journal.pone.0301710
- Hidayat, B. A., Yuliana, E., Wicaksono, B., et al. (2021). Objectives of Sustainable Development and Analysis of People’s Economy Improvement. In: Proceedings of the International Conference on Sustainable Innovation Track Humanities Education and Social Sciences (ICSIHESS 2021). https://doi.org/10.2991/assehr.k.211227.030
- Hidayat, B., Fatoni, A., Saksono, H., et al. (2022). Integrated River Transport Development to Support Smart City. Jurnal Bina Praja, 14(1), 1–15. https://doi.org/10.21787/jbp.14.2022.1-15
- Irarrazaval, F., & Viale, C. (2022). Natural gas revenues, subnational politics, and agrarian change in Peru and Bolivia. The Extractive Industries and Society, 11, 101093. https://doi.org/10.1016/j.exis.2022.101093
- Ivanyna, M., & Salerno, A. (2021). Governance for Inclusive Growth. IMF Working Papers, 2021(098), 1. https://doi.org/10.5089/9781513582467.001
- Jang, H., & Topal, E. (2020). Transformation of the Australian mining industry and future prospects. Mining Technology, 129(3), 120–134. https://doi.org/10.1080/25726668.2020.1786298
- Kumari, A., & Sharma, A. K. (2017). Infrastructure financing and development: A bibliometric review. International Journal of Critical Infrastructure Protection, 16, 49–65. https://doi.org/10.1016/j.ijcip.2016.11.005
- Kwakwa, P. A., Dankwah, J. B., Adu Boahen, E., et al. (2023). Financial development in South Africa: The role of natural resources, IT infrastructure, and government size. Cogent Economics and Finance, 11(2). https://doi.org/10.1080/23322039.2023.2281844
- Kyriakopoulos, G. L., Sebos, I., Triantafyllou, E., et al. (2023). Benefits and Synergies in Addressing Climate Change via the Implementation of the Common Agricultural Policy in Greece. Applied Sciences, 13(4), 2216. https://doi.org/10.3390/app13042216
- Le Clech, N., & Guevara-Pérez, J. C. (2023). Latin America and the Caribbean’s Productivity: The Role of Pro-Market Policies, Institutions, Infrastructure, and Natural Resource Endowments. Economies, 11(5), 142. https://doi.org/10.3390/economies11050142
- Leigh, A., & Neill, C. (2011). Can national infrastructure spending reduce local unemployment? Evidence from an Australian roads program. Economics Letters, 113(2), 150–153. https://doi.org/10.1016/j.econlet.2011.05.037
- Li, Y., Mehmood, N., & Iqbal, N. (2022). Natural resource abundance and financial development: A case study of emerging (E−15) economies. Resources Policy, 79, 103018. https://doi.org/10.1016/j.resourpol.2022.103018
- Liang, Y., Zhou, H., Zeng, J., et al. (2024). Do natural resources rent increase green finance in developing countries? The role of education. Resources Policy, 91, 104838. https://doi.org/10.1016/j.resourpol.2024.104838
- Liang, Y., Zhou, K., Li, X., et al. (2020). Effectiveness of high-speed railway on regional economic growth for less developed areas. Journal of Transport Geography, 82, 102621. https://doi.org/10.1016/j.jtrangeo.2019.102621
- Liu, T., & Lan, B. (2024). On the conflict of natural resources abundance and export upgrading in upper-middle and high-income countries. Resources Policy, 89, 104633. https://doi.org/10.1016/j.resourpol.2023.104633
- Magazzino, C., & Mele, M. (2021). On the relationship between transportation infrastructure and economic development in China. Research in Transportation Economics, 88, 100947. https://doi.org/10.1016/j.retrec.2020.100947
- Martinez-Vazquez, J. (2011). The Impact of Fiscal Decentralization: Issues in Theory and Challenges in Practice. Asian Development Bank.
- Mohamed, E. S. E. (2020). Resource Rents, Human Development and Economic Growth in Sudan. Economies, 8(4), 99. https://doi.org/10.3390/economies8040099
- Morgandi, M. (2008). Extractive Industries Revenues Distribution at the Sub‐National Level. Revenue Watch Inst.
- Moti, U. G. (2019). Africa’s Natural Resource Wealth: A Paradox of Plenty and Poverty. Advances in Social Sciences Research Journal. https://doi.org/10.14738/assrj.67.6814
- Mutiarin, D., Nurmandi, A., Paksi, A. K., et al. (editors). (2022). Proceedings of the International Conference on Sustainable Innovation on Humanities, Education, and Social Sciences (ICOSI-HESS 2022). Atlantis Press SARL. https://doi.org/10.2991/978-2-494069-65-7
- Njue, N., Stenfert Kroese, J., Gräf, J., et al. (2019). Citizen science in hydrological monitoring and ecosystem services management: State of the art and future prospects. Science of The Total Environment, 693, 133531. https://doi.org/10.1016/j.scitotenv.2019.07.337
- Plank, B., Streeck, J., Virág, D., et al. (2022). From resource extraction to manufacturing and construction: flows of stock-building materials in 177 countries from 1900 to 2016. Resources, Conservation and Recycling, 179, 106122. https://doi.org/10.1016/j.resconrec.2021.106122
- Polyzos, S., & Arabatzis, G. (2008). Spatial distribution of natural resources and their contribution to regional development in Greece. Discover the world’s research, 9(1), 183-199.
- Poudineh, R., Sen, A., & Fattouh, B. (2018). Advancing renewable energy in resource-rich economies of the MENA. Renewable Energy, 123, 135–149. https://doi.org/10.1016/j.renene.2018.02.015
- Raihan, A. (2023). Artificial intelligence and machine learning applications in forest management and biodiversity conservation. Natural Resources Conservation and Research, 6(2), 3825. https://doi.org/10.24294/nrcr.v6i2.3825
- Ramey, V. (2020). The Macroeconomic Consequences of Infrastructure Investment. National Bureau of Economic Research. https://doi.org/10.3386/w27625
- Saksono, H., Hidayat, B. A., Yuliana, E., et al. (2022). The Impact of Tourism and The Creative Industry on The Economy of The Community. In: Proceedings of the International Conference on Sustainable Innovation Track Accounting and Management Sciences (ICOSIAMS 2021). https://doi.org/10.2991/aebmr.k.211225.004
- Salite, D., Kirshner, J., Cotton, M., et al. (2021). Electricity access in Mozambique: A critical policy analysis of investment, service reliability and social sustainability. Energy Research and Social Science, 78, 102123. https://doi.org/10.1016/j.erss.2021.102123
- Savoia, A., & Sen, K. (2021). The Political Economy of the Resource Curse: A Development Perspective. Annual Review of Resource Economics, 13(1), 203–223. https://doi.org/10.1146/annurev-resource-100820-092612
- Sebos, I., Kitsara, G., Karali, A., et al. (2023). Climate-Resilient Urban Regeneration: Transforming School Yards for a Sustainable and Adaptive Future. https://doi.org/10.5194/ems2023-73
- Shahbaz, M., Siddiqui, A., Ahmad, S., et al. (2023). Financial development as a new determinant of energy diversification: The role of natural capital and structural changes in Australia. Energy Economics, 126, 106926. https://doi.org/10.1016/j.eneco.2023.106926
- Shi, Y., Guo, S., & Sun, P. (2017). The role of infrastructure in China’s regional economic growth. Journal of Asian Economics, 49, 26–41. https://doi.org/10.1016/j.asieco.2017.02.004
- Shi, Z., Loh, L., Wu, H., et al. (2024). Smarter and cleaner: How does energy digitalization affect carbon productivity? Energy Strategy Reviews, 52, 101347. https://doi.org/10.1016/j.esr.2024.101347
- Shivaprakash, K. N., Swami, N., Mysorekar, S., et al. (2022). Potential for Artificial Intelligence (AI) and Machine Learning (ML) Applications in Biodiversity Conservation, Managing Forests, and Related Services in India. Sustainability, 14(12), 7154. https://doi.org/10.3390/su14127154
- Song, M., Wang, J., & Zhao, J. (2018). Coal endowment, resource curse, and high coal-consuming industries location: Analysis based on large-scale data. Resources, Conservation and Recycling, 129, 333–344. https://doi.org/10.1016/j.resconrec.2016.08.005
- Sun, Y., Ak, A., Serener, B., et al. (2020). Natural resource abundance and financial development: A case study of emerging seven (E−7) economies. Resources Policy, 67, 101660. https://doi.org/10.1016/j.resourpol.2020.101660
- Teng, Y.-P. (2023). Natural resources extraction and sustainable development: Linear and non-linear resources curse hypothesis perspective for high income countries. Resources Policy, 83, 103685. https://doi.org/10.1016/j.resourpol.2023.103685
- Tienhaara, K., & Walker, J. (2021). Fossil capital, ‘unquantifiable risk’ and neoliberal nationalizations: The case of the Trans Mountain Pipeline in Canada. Geoforum, 124, 120–131. https://doi.org/10.1016/j.geoforum.2021.06.005
- Turan, T., & Yanıkkaya, H. (2020). Natural resource rents and capital accumulation nexus: do resource rents raise public human and physical capital expenditures? Environmental Economics and Policy Studies, 22(3), 449–466. https://doi.org/10.1007/s10018-020-00264-9
- Villena Gonzales, W., Mobashsher, A., & Abbosh, A. (2019). The Progress of Glucose Monitoring—A Review of Invasive to Minimally and Non-Invasive Techniques, Devices and Sensors. Sensors, 19(4), 800. https://doi.org/10.3390/s19040800
- Wang, S., Wang, X., & Lu, B. (2022). Is resource abundance a curse for green economic growth? Evidence from developing countries. Resources Policy, 75, 102533. https://doi.org/10.1016/j.resourpol.2021.102533
- Wong, C.-S. (2021). Science Mapping: A Scientometric Review on Resource Curses, Dutch Diseases, and Conflict Resources during 1993–2020. Energies, 14(15), 4573. https://doi.org/10.3390/en14154573
- Xu, G., Jiang, J., & Wang, R. (2022). The impact of natural resource endowment and transportation infrastructure on China’s regional green economic performance in the context of COP26. Resources Policy, 79, 103099. https://doi.org/10.1016/j.resourpol.2022.103099
- Yao, H., Tian, M., Ma, J., et al. (2019). Study on “Resource Curse” Based on the Panel Data in Coal Resource-Rich Districts of Inner Mongolia. E3S Web of Conferences, 118, 01015. https://doi.org/10.1051/e3sconf/201911801015
- Zhang, C., & Teng, W. (2023). Natural resources led financing of investment: A prospect of China’s provincial data. Resources Policy, 86, 104164. https://doi.org/10.1016/j.resourpol.2023.104164
- Zhong, Y., Chen, X., Yao, X., et al. (2024). Natural resources and the trilemma of financial development, institutions, and markets: Sustainable development pathway via natural resources for China. Resources Policy, 90, 104759. https://doi.org/10.1016/j.resourpol.2024.104759
- Zhou, M., Jiang, K., & Chen, Z. (2023). The side effects of local government debt: Evidence from urban investment bonds and corporate pollution in China. Journal of Environmental Management, 344, 118739. https://doi.org/10.1016/j.jenvman.2023.118739
DOI: https://doi.org/10.24294/jipd.v8i11.8405
Refbacks
- There are currently no refbacks.
Copyright (c) 2024 Bachtari Alam Hidayat, Agus Faturohim, Loso Judijanto, Sidiq Hanapi, Alfayanti Alfayanti, Marhaendro Purno, Firdaus Landekumandang, Ribut Nurul Tri Wahyuni, Kunihiko Shinoda
License URL: https://creativecommons.org/licenses/by/4.0/
This site is licensed under a Creative Commons Attribution 4.0 International License.