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Langgas: Jurnal Studi PembangunanLanggas: Jurnal Studi Pembangunan

The welfare of the community is something that a country needs to achieve. The economy and social life reflect the welfare of the community. To improve peoples welfare, the Government needs to optimize a series of fiscal policy instruments to achieve this goal. This study seeks to see the effect of fiscal policy instruments in the expenditure sector to improve peoples welfare with the HDI as a measure of community welfare. Using the quantitative descriptive method, the researcher attempts to see the effect of housing and community amenities, health, and education expenditure on the Indonesian HDI in 2010-2021. Using multiple linear regression analysis, it is found that 2010-2021, Housing and Community Amenities Expenditure, Health Expenditure, and Education Expenditure had a positive and significant impact on the Indonesian HDI. So, the researcher recommends that the Government increase the budget allocation for the three sectors and implement programs to improve the quality of human resources.

The study concludes that during the 2010-2021 period, Housing and Community Amenities Expenditure, Health Expenditure, and Education Expenditure had a significant and positive impact on increasing the HDI in Indonesia.Therefore, the government should prioritize linking funding to expected outcomes through program-based budgeting.Increasing budget allocation for education, health, and housing and community amenities is recommended, as these sectors have proven effective in enhancing human development.Furthermore, the government should implement improved programs, both physical and non-physical, to enhance educational facilities and services, increase school participation rates, improve the average length of schooling, and enhance health facilities and public infrastructure.

Based on the findings of this research, several avenues for future study emerge. First, a more in-depth investigation into the specific mechanisms through which increased expenditure in education, health, and housing translates into improvements in HDI components – such as life expectancy, education attainment, and income – is warranted. This could involve micro-level studies examining the impact of specific programs on individual well-being. Second, future research should explore the role of the quality of expenditure, not just the quantity. While increased budget allocation is important, the effectiveness of spending depends on factors like efficient resource allocation, transparency, and accountability. Investigating the impact of governance indicators on the relationship between fiscal policy and HDI could provide valuable insights. Finally, a comparative analysis of the effectiveness of different fiscal policy instruments across various regions within Indonesia, considering their unique socio-economic contexts, would be beneficial. This could help identify best practices and tailor policies to specific regional needs, ultimately contributing to more equitable and sustainable human development across the archipelago. These studies should also consider the long-term effects of fiscal policies on human development, going beyond the 2010-2021 timeframe to assess the sustainability of observed improvements.

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