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Vol. 1 No. 4 (2026): August

Local Government Financial Performance and Road Infrastructure Development: Geographic Accessibility as Moderator

https://doi.org/10.35912/ambus.v1i4.4382

Abstract

Purpose: This study examines the effect of local government financial performance on road infrastructure development in the regencies and municipalities of Papua Province, Indonesia, and tests whether geographic accessibility moderates this relationship.

Methodology: The study applies a quantitative panel data approach covering 29 regencies and municipalities in Papua Province prior to the establishment of new autonomous regions, observed over the 2018 to 2022 period, yielding 145 observations. Local government financial performance is measured through the Regional Financial Independence Ratio and the Capital Expenditure Ratio, road infrastructure development is proxied by the Road Density Ratio, and geographic accessibility is proxied by the Construction Cost Index. Panel data regression was estimated using the Random Effect Model, selected through the Chow, Hausman, and Lagrange Multiplier tests, with moderation tested through interaction terms.

Results: The Regional Financial Independence Ratio and the Capital Expenditure Ratio did not have a significant effect on the Road Density Ratio, and the Construction Cost Index was not proven to moderate either relationship. The model explained only 3.60% of the variation in the Road Density Ratio.

Conclusions: Road infrastructure development in Papua cannot be strongly explained by local financial performance and geographic accessibility alone.

Limitations: The study is confined to the pre-division administrative boundaries of Papua Province and uses aggregate capital expenditure rather than road-specific spending.

Contributions: The study offers empirical evidence on the limits of standard financial performance indicators in explaining physical infrastructure outcomes in a geographically extreme setting, informing more targeted budget allocation policy.

Keywords

Capital Expenditure Ratio Construction Cost Index Financial Independence Ratio Panel Data Regression Road Density Ratio

How to Cite

Utomo, D. S., Lamba, A., & Sanggrangbano, A. (2026). Local Government Financial Performance and Road Infrastructure Development: Geographic Accessibility as Moderator. Advances in Management and Business Studies, 1(4), 209–227. https://doi.org/10.35912/ambus.v1i4.4382

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Authors

1 Danar Setyo Utomo
Universitas Cendrawasih, Papua, Indonesia
2 Arung Lamba
Universitas Cendrawasih, Papua, Indonesia
3 Agustina Sanggrangbano
Universitas Cendrawasih, Papua, Indonesia

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Vol. 1 No. 4 (2026): August
Section: Articles
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