A revisiting regional development efficiency in west sumatra: A dea–bootstrap analysis of infrastructure and human capital quality

Abstract

This study evaluates how effectively regional inputs—local government expenditures, bank credit, domestic investment, and foreign direct investment—are transformed into economic outputs (GRDP, inverse unemployment rate, and inverse Gini ratio) across West Sumatra's districts and cities for the period 2022–2024. We employ a two-stage quantitative approach. First, Data Envelopment Analysis (DEA) with an input-oriented Variable Returns to Scale (VRS) model measures the relative efficiency of 19 decision-making units (districts/cities) observed over three years (57 observations). Second, Structural Equation Modeling-Partial Least Squares (SEM-PLS) is applied to test the influence of physical infrastructure (road density, water supply capacity, electricity customers, fuel stations) and human capital quality (Human Development Index/HDI) on the DEA efficiency scores. The DEA results reveal significant efficiency disparities, with average efficiency at 88.4%, suggesting potential input savings of 11.6%. Physical infrastructure exhibits a significant negative effect on efficiency (β = −0.350; p < 0.001), while HDI shows a positive but statistically insignificant effect (β = 0.094; p = 0.399). The model explains 12.4% of the variance in efficiency scores (R² = 0.124). The findings reveal a paradox: increasing infrastructure investment does not necessarily enhance efficiency unless supported by institutional and managerial capacity. Human capital improvements have not yet been fully absorbed by local labor markets. Institutional quality, absorptive capacity, and implementation effectiveness are critical moderators. Local governments should: (1) prioritize institutional strengthening and procurement transparency alongside infrastructure investment; (2) adopt context-sensitive, demand-driven infrastructure projects rather than large-scale expansions where absorptive capacity is low; and (3) align human capital policies with local labor-market needs through vocational training and firm-education linkages to ensure HDI gains translate into productive efficiency.