The Influence of Local Taxes, Local Government Expenditure, Investment, and the Human Development Index (HDI) on Economic Growth in the Barsela Aceh Region

Abstract

This study aims to analyze the effects of local taxes, regional expenditure, investment, and the Human Development Index (HDI) on economic growth in the Southwest (Barsela) region of Aceh Province. The study employs a quantitative approach using panel data that combine time-series data for 2011–2025 and cross-sectional data from eight regencies/cities, yielding a total of 120 observations. The data were obtained from the Directorate General of Fiscal Balance of the Ministry of Finance of the Republic of Indonesia and Statistics Indonesia. The analysis uses panel-data regression, with model selection based on the Chow, Hausman, and Lagrange Multiplier tests. The final model is the Common Effect Model (CEM). Because heteroskedasticity was detected, hypothesis testing uses White cross-section robust standard errors. The results show that local taxes have a positive but insignificant effect, regional expenditure has a negative but insignificant effect, investment has a positive and significant effect, and HDI has a negative and significant effect on economic growth. Simultaneously, the four variables have a significant effect. The adjusted R-squared value of 0.085746 indicates that the model explains 8.57% of the variation in economic growth, while the remaining 91.43% is explained by factors outside the model.