This study aims to analyze the composition of local government spending (education, health,
marine and fisheries, agriculture, and general allocation funds), the number of poor people,
inflation, foreign direct investment and opinion Supreme Audit Agency against the Local
Government Financial Report to economic growth in several provinces in Indonesia. This study
uses data from 18 provinces in Indonesia from 2010 to 2015.
The model used in this study is panel data regression, the use of data panels in economic research
has several main advantages over the data type cross section and time series. Panel data can
provide researchers with a large number of observations, increasing the degree of freedom, data
having great variability and reducing the collinearity between explanatory variables, which can
produce efficient econometric estimates.
Almost all variables have an influence on economic growth (government expenditure for
education, government expenditure for health, government expenditure for marine and fishery,
government expenditure for agriculture, general allocation fund, foreign direct investment, and
inflation), except the number of poor people and opinion of the Supreme Audit Agency against
the Local Government Financial Report has no influence on on economic growth.