THE IMPACT OF PROCUREMENT DIGITALIZATION ON PUBLIC SPENDING EFFICIENCY IN BORDER REGIONS: EVIDENCE FROM WEST KALIMANTAN
DOI:
https://doi.org/10.51195/iga.v16i2.127Keywords:
E-Procurement, Spending Efficiency, Digital Divide, Difference-In-DifferencesAbstract
Border regions face formidable challenges, including high logistics costs, limited digital infrastructure, and complex inter-agency coordination, which potentially undermine the effectiveness of electronic procurement implementation. This study aims to analyze the effect of procurement digitalization (e-procurement) on government spending efficiency in border regions, specifically examining the moderating role of the digital divide. Employing a quantitative approach with an explanatory research design, this study utilizes secondary panel data spanning the 2020-2025 period. The unit of analysis comprises 14 border sub-districts across five regencies in West Kalimantan Province, Indonesia, yielding a total of 84 observations. Data analysis was conducted using descriptive statistics, panel data regression, Difference-in-Differences (DiD), and panel regression with an interaction term. The empirical results indicate that e-procurement has a positive and significant effect on government spending efficiency, generating expenditure savings by reducing price variances and improving governance quality. Furthermore, e-procurement significantly mitigates procurement risks evidenced by a decline in failed tenders, retendering, and disputes and substantially accelerates the procurement process, resulting in shorter completion durations. However, the moderation test reveals that the digital divide does not moderate the relationship between e-procurement and spending efficiency. This study provides theoretical contributions by integrating Transaction Cost Economics, Digital Government Theory, and Digital Divide Theory to elucidate the effectiveness of procurement digitalization. Practically, it recommends that governments parallel e-procurement expansion with equitable digital infrastructure distribution, human resource capacity building, and robust digital transformation policies to optimize spending efficiency in border areas
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