Building Acceleration of Economic Growth Model Through Education and Health Budget Allocation: Cases in Indonesia

The Role of Capital Expenditure on Education, Health Expenditure, on the effort to reduce poverty level is an interesting study because the allocation of expenditure to several countries including Indonesia is quite large, so it is necessary to review the effectiveness of the budget allocation to reduce poverty and increase human economic growth (Psacharopoulus, 1972) in Todaro, 2000). The level of public welfare can no longer be measured from monetary values such as income per capita, but should include non-economic measures (Connolly and Munro (1999); Perkins (2001); Todaro and Smith (2002); and Van Den Berg 2005), and more focus on human development which can be measured from the high government commitment in allocating budget for education, health and other factors which are strongly related to the development of human resources. The objectives of this research are to analyze and assess on how: (i) the impact of the allocation of education capital expenditure and the allocation of health expenditure on the Human Development Index; (2) the influence of human development index on economic growth; (3) the effect of economic growth on the level of poverty; and (4) the interpretation of the economic growth acceleration model. The research was conducted by taking samples in 23 regencies/municipalities in South Sulawesi Province which is one of the provinces with the highest economic growth rate in Indonesia. The data used is Panel data with period 2004 - 2016, then processed by using regression analysis method. The Result of the Research from the first model., it shows that from the t test, it is found that the variables contained in the data which give significant effect to the Human Development Index is the allocation of Education fund, at the real level of 5%. The value of R2 generated in this model is 0.637 which means that 63.7% of the human development index in 23 urban districts for 10 years is explained by the variables in the model, the allocation of education and health funds, the rest by other variables in the model. The variables in the allocation of education funds have a negative influence on the human development index. The value of regression coefficient of this variable is 0.72 with p-value of 0.003. meaning that any 1% increase in health allocation funds will reduce the human development index by 0.72. For the panel data analysis with this random effect model there are individual and time effects that show differences in human development indexes between districts and municipalities and between years. So the value of constants to be obtained will be different for each district/municipality and different for each time. The determinant coefficient value generated in model 1 shows the figure of 0.637 means that 63.7% of the human development index is explained by the variables in the model, i.e. the allocation of education and health funds. In model 2 it was found that the value of determinant coefficient is 0.0854, which means that only 8.5% of the diversity of economic growth in the twenty three districts/municipalities in South Sulawesi in the period 2007-2016 explained by the variables on the human development index.