Intergovernmental Fiscal Transfers and Regional Economic Performance: Evidence from Papua Province, Indonesia

Economic inequality between regions in Indonesia, particularly between Papua and other regions, remains a strategic issue despite Papua's abundant natural resources. Transfers of funds from the central government, such as the General Allocation Fund (GAF), Revenue Sharing Fund (RSF), and Special Autonomy Fund (SAF), are expected to boost regional economic growth. This study aims to analyze the influence of GAF, RSF, and SAF on Gross Regional Domestic Product (GRDP) of districts/cities in Papua Province. Secondary data were obtained from the Central Statistics Agency (BPS) and the Ministry of Finance for the period 2013–2022. The analysis method used panel data regression with a Fixed Effect Model selected through the Chow and Hausman test. The results show that GAF and RSF have a significant positive effect on GRDP, while SAF has no significant effect. This finding indicates that general transfers and revenue sharing can improve regional economic performance, while special autonomy funds have not yet provided the expected impact, likely due to constraints in governance and utilization effectiveness. Regional governments need to optimize the use of GAF and RSF for productive public spending and improve the SAF management mechanism to make a real contribution to Papua's economic growth.