Develop local economic activities

Oct 13, 2025 by miodeya.com 95 views

Analysis of Factors Affecting Karo Regency Original Local Revenue (PAD)

Introduction

Regional Original Revenue (PAD) is a vital source of income for local governments, enabling them to support public development and services. In Karo Regency, understanding the factors that influence PAD is crucial for effective financial management and sustainable development. This study aims to identify the impact of Gross Regional Domestic Product Variables (GRDP), population, and investment on PAD from 2005 to 2019. The research type applied is quantitative descriptive, utilizing secondary data obtained from official sources.

Methodology

The analysis methods employed in this study include classical assumptions testing and multiple linear regression analysis. These methods enable researchers to assess the relationship between independent variables (GRDP, population, and investment) and dependent variables (PAD). By applying these techniques, the study aims to provide insights into the factors that influence PAD in Karo Regency.

Results

The results of the study indicate that, partially, the GRDP variable has a positive influence on PAD, but it is not significant. Similarly, the population variable shows a positive but not significant effect on PAD. The investment variable also has a positive and insignificant effect on PAD. Although the results suggest that the three variables have a positive influence on PAD, it is essential to note that this influence is not significant.

Additional Analysis and Explanation

The insignificant effect of the GRDP, population, and investment variables on PAD can be attributed to several factors. Firstly, optimal budget management is crucial for regional income growth. If regional budget management is less optimal, even with an increase in GRDP and investment, PAD will not increase proportionally. Poor management can result in budget leaks and the use of funds that are not on target.

Secondly, local economic activity plays a significant role in regional income growth. Although the population increases, if local economic activities are not well developed, regional income will not increase. The level of community participation in the low formal economic sector can be one of the obstacles.

Thirdly, external factors such as unstable macroeconomic conditions, such as inflation or recession, can affect investment and GRDP, which in turn has an impact on PAD. These factors highlight the need for local governments to formulate a more proactive policy and support the increase in PAD.

Conclusion

To increase the PAD of Karo Regency, a holistic approach is necessary, involving improvement in various aspects, such as budget management, the development of the local economic sector, policy making that supports investment, and attention to macroeconomic conditions. Furthermore, further research is also needed to explore other factors that may contribute to changes in PAD in the area.

Recommendations

Based on the findings of this study, the following recommendations are made:

Improve budget management: Local governments should prioritize optimal budget management to ensure that PAD increases proportionally with GRDP and investment.
Develop local economic activities: Local governments should focus on developing local economic activities to increase community participation in the formal economic sector.
Formulate proactive policies: Local governments should formulate policies that support investment and PAD growth.
Monitor macroeconomic conditions: Local governments should closely monitor macroeconomic conditions to mitigate the impact of external factors on PAD.

Future Research Directions

Further research is needed to explore other factors that may contribute to changes in PAD in Karo Regency. Some potential research directions include:

Investigating the impact of other variables: Researchers can investigate the impact of other variables, such as infrastructure development, human capital, and institutional quality, on PAD.
Analyzing the effect of policy interventions: Researchers can analyze the effect of policy interventions, such as tax reforms and investment incentives, on PAD.
Examining the role of external factors: Researchers can examine the role of external factors, such as global economic trends and natural disasters, on PAD.

By exploring these research directions, policymakers and researchers can gain a deeper understanding of the factors that influence PAD in Karo Regency and develop effective strategies to promote sustainable development.
Frequently Asked Questions (FAQs) about Analysis of Factors Affecting Karo Regency Original Local Revenue (PAD)

Q1: What is Regional Original Revenue (PAD) and why is it important?

A1: Regional Original Revenue (PAD) is a vital source of income for local governments, enabling them to support public development and services. It is essential for local governments to understand the factors that influence PAD to ensure effective financial management and sustainable development.

Q2: What are the main factors that affect PAD in Karo Regency?

A2: The main factors that affect PAD in Karo Regency are Gross Regional Domestic Product Variables (GRDP), population, and investment. These factors have a positive influence on PAD, but the influence is not significant.

Q3: What is the significance of GRDP on PAD?

A3: GRDP has a positive influence on PAD, but it is not significant. This means that even if GRDP increases, PAD will not increase proportionally.

Q4: How does population affect PAD?

A4: Population has a positive influence on PAD, but it is not significant. This means that even if the population increases, PAD will not increase proportionally.

Q5: What is the role of investment in PAD?

A5: Investment has a positive influence on PAD, but it is not significant. This means that even if investment increases, PAD will not increase proportionally.

Q6: What are the potential causes of the insignificant effect of GRDP, population, and investment on PAD?

A6: The potential causes of the insignificant effect of GRDP, population, and investment on PAD include:

Optimal budget management
Local economic activity
External factors such as unstable macroeconomic conditions

Q7: What are the recommendations for increasing PAD in Karo Regency?

A7: The recommendations for increasing PAD in Karo Regency include:

Improving budget management
Developing local economic activities
Formulating proactive policies
Monitoring macroeconomic conditions

Q8: What are the future research directions for PAD in Karo Regency?

A8: The future research directions for PAD in Karo Regency include:

Investigating the impact of other variables on PAD
Analyzing the effect of policy interventions on PAD
Examining the role of external factors on PAD

Q9: Why is it essential to understand the factors that affect PAD in Karo Regency?

A9: It is essential to understand the factors that affect PAD in Karo Regency because PAD is a vital source of income for local governments. Understanding the factors that affect PAD enables policymakers to develop effective strategies to promote sustainable development and improve the quality of life for citizens.

Q10: What are the implications of the findings of this study for policymakers and researchers?

A10: The implications of the findings of this study for policymakers and researchers are that they should prioritize optimal budget management, develop local economic activities, formulate proactive policies, and monitor macroeconomic conditions to increase PAD in Karo Regency. Additionally, further research is needed to explore other factors that may contribute to changes in PAD in the area.