DOES THE STATUS OF DISADVANTAGED REGIONS MATTER IN THE AMOUNT OF SPESIFIC PURPOSE GRANT

Abstraksi

There are 122 districts categorized as disadvantaged regions according to President Regulation number 181 in 2015. One of their serious problems is their fiscal capacity to develop their regions. The "Indonesian Big Bang" Decentralization since 1999 has taken fiscal decentralization as the main issue to reduce fiscal inequality, especially to the 122 disadvantaged regions. There are about 32 districts classified as Disadvantaged Regions having relatively low fiscal capacity index (FCI<2.0) receiving less than 100 billion rupiahs from spesific purpose grant (DAK). In contrast, 12 districts classified from middle to very high fiscal capacity index (FCI≥2.0) endow more than 100 billion rupiahs from DAK. The strong dependency on DAK becomes significant to the Disadvantaged Regions to deliver public goods and services . The observation of cross-section data in 2017 to 507 districts shows that being Disadvantaged Regions has positive effect to the amount of spesific purpose grant (DAK) received by the districts.