The Mediating Role of Perceived Public Service Quality in the Influence of Sectoral Budget Allocations on Human Development Index in Langkat Regency, Indonesia

Abstract

This study examines how perceived public service quality mediates the influence of sectoral budget allocations—specifically in education, health, and infrastructure—on the Human Development Index (HDI) in Langkat Regency, North Sumatra, Indonesia. Despite steady increases in budget allocations, Langkat’s HDI progress remains slow compared to its regional counterparts. The study employs a quantitative explanatory design using Partial Least Squares Structural Equation Modeling (PLS-SEM) with 115 stakeholders from key government sectors, using data collected during the 2023 fiscal year. The SERVQUAL model is adopted to measure service quality across five dimensions. Findings reveal that while sectoral expenditures do not directly improve HDI, they significantly enhance service quality, which in turn positively affects HDI outcomes. The results suggest that effective public service delivery is essential to converting fiscal resources into human development gains. This study offers practical insights for regional governance reforms in developing countries.