Authors:
Ronald Evans, Alexander Phuk Tjilen, Ransta L. Lekatompessy

Addresses:
Department of Public Administration, Faculty of Social and Political Sciences, Musamus University, Merauke, South Papua, Indonesia.

Abstract:

This study analyses the effects of General Allocation Funds (DAU) and Special Autonomy Funds (Otsus) on economic growth in South Papua Province, Indonesia. The research evaluates whether fiscal transfers from the central government effectively stimulate regional economic performance in newly established autonomous regions. This study employs a quantitative approach using multiple linear regression with quarterly time series data from 2023 to 2025. The dependent variable is economic growth (measured by GRDP), while the independent variables are DAU and Otsus. Data were obtained from the Central Bureau of Statistics (BPS) and the Ministry of Finance publications. The results show that DAU has a positive but insignificant effect on economic growth, whereas Otsus shows a negative, insignificant relationship. Simultaneously, both fiscal transfers do not significantly influence economic growth, implying that fiscal allocation alone is insufficient to drive regional development in South Papua. The findings highlight that the effectiveness of fiscal decentralisation depends on institutional capacity, the quality of fiscal governance, and the orientation of public spending toward productive sectors. Policy implications suggest the need to reorient Special Autonomy funds toward long-term productive investment, strengthen fiscal management capacity, and enhance central–local government coordination to achieve inclusive and sustainable growth in South Papua. 

Keywords: General Allocation Fund (DAU); Special Autonomy Fund (Otsus); Fiscal Decentralisation; Economic Growth; Regional Original Revenue; Multiple Linear Regression; Quantitative Approach.

Received on: 24/11/2024, Revised on: 15/01/2025, Accepted on: 15/04/2025, Published on: 12/12/2025

DOI: 10.69888/FTSHS.2025.000547

FMDB Transactions on Sustainable Humanities and Society, 2025 Vol. 2 No. 4, Pages: 181-190

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