| Summary: | Regional division is a politic improvement which is simultaneously
running on a regional autonomy policy, since 2001. Requirements are shown on
Government Regulation Number 78 Year 2007, which is generate from
Government Regulation Number 129 Year 2000. Considering the fact, that
regional division has not make any differences on economic welfare, than it
should be evaluated. After since, a question comes up to become a research goal.
Are other region affected by the separation?
Because of the dependency of new region on grants from other regions or
central government, the impact is more related to income perspective, such as
General Allocation Fund (DAU). Based on this situation, Kendall�s Rank
Correlation and Gini Coefficient has chosen in this research for the quest. The
results are grant revenue, on new region, increased significantly in the second year
after separation. At that time, the level of horizontal fiscal balance is worst than
before, which mean is close to inequality.
Based on those results, this research concludes that regional division
affecting other regions and �disturbing� the level of horizontal fiscal balance.
Agency problem and dependency on grants are the main focus to be solved.
Evaluation should be made to DAU formula, especially regional division formula,
in order to reduce the effect in national scope. Evaluation is also need to be
applied on division itself, so the economic growth can achieve society welfare.
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