The Greek regional planning policies for settlements

Ionian Islands and suggested solutions posted on www.enae.grdocseisigisi_minetos.docAccessed 27 October 2013. in Greek. Plan Bleu and Centre d’Activit´es R´egionales, 2001b. Urban sprawl in the Mediterranean region, PNEU, PAMand Plan Bleu, Sophia Antipolis. Available from http:www.planbleu.orgpublicationsurbsprawl.pdf accessed June 2006. art_02_end_page_bookmark article_3_start_page_bookmark DOES HUMAN CAPITAL INVESTMENT MATTER FOR GROWTH? EVIDENCE FROM INDONESIA DURING THE FISCAL DECENTRALIZATION ERA Losina PURNASTUTI Faculty of Economics Yogyakarta State University Kampus Karangmalang Yogyakarta 55281 Indonesia losina_purnastutiuny.ac.id Corresponding author Bambang SUPRAYITNO Faculty of Economics Yogyakarta State University Kampus Karangmalang Yogyakarta 55281 Indonesia bambang_suny.ac.id SUGIHARSONO Faculty of Economics Yogyakarta State University Kampus Karangmalang Yogyakarta 55281 Indonesia sugiharsonouny.ac.id Abstract The purpose of this study is to investigate the role of regional government expenditure, workers education level, and government expenditure for health and education sector in economic growth by using secondary data published by National Bureau of Statistics Indonesia. Panel data estimation approach was adopted to analyze the data. The result of the study shows that education contributes significantly to the improvement of labor productivity. Other findings indicate that the population has positive impacts on various aspects of human development and labor productivity while the total area owned by the local goverment has no effect on both of the two aspects aforementioned. It implies that human resource is an essential component for economic growth and for human development itself. Keywords: Human Capital Investment, Government Expenditure, Fiscal Decentralization. JEL classification: H51, H52, H72, H75 Acknowledgement: This paper is part of the research project entitled “Kontribusi Human Capital Investment dalam Pengeluaran Pemda Provinsi terhadap Pertumbuhan Ekonomi dan Pembangunan Manusia dalam Era Desentralisasi Fiskal”, supported by the Development and Upgrading of Seven Universities in Improving the Quality and Relevance of Higher Education in Indonesia, Islamic Development Bank IDB. The authors gratefully acknowledge the financial assistance from IDB DP2M.

1. Introduction

Along with the decentralization, there are numbers of money flowing massively, from the central government to the regional goverment. As a result, the subject and the object of development become closer to the local goverment who has a discretionary authority to manage the budget, and therefore, the development movement can be maximally optimalized for the benefit of many people. Desentralization has many dimensions and are generally divided into three categories, namely administration desentralization, political desentralization, and fiscal desentralization. Among the three categories, the readiness aspect of fiscal desentralization is one which is often ignored. The influence of fiscal desentralization to the society prosperity in regions depends on the readiness of local goverment’s capacity in managing the finance. If the local goverment is ready to manage the fiscal, the APBN finance which is administered to the region can improve the welfare of its people optimally. And it means that the management of