LOCAL PUBLIC POLICY EFFECTIVENESS: POLICY IMPLEMENTATION, INTERGOVERNMENTAL COOPERATION, AND REGULATORY CAPACITY TO IMPROVE LOCAL ECONOMIC PERFORMANCE

Abstract

The efficacy of public policy constitutes a central strategic concern in local governance, as it is intrinsically associated with developmental achievements and the enhancement of regional economic outcomes. The present research investigates the impact of intergovernmental collaboration and regulatory capacity on public policy effectiveness and the economic performance of Pematangsiantar City, positioning policy implementation quality as a mediating construct. A quantitative research design was adopted, employing a structured survey administered to state civil servants within the Pematangsiantar City Government. Using purposive sampling, 200 respondents were selected. The collected data were examined through Structural Equation Modelling using Partial Least Squares (SEM-PLS). The empirical findings indicate that intergovernmental collaboration and regulatory capacity exert statistically significant and positive effects on policy implementation quality, public policy effectiveness, and regional economic performance. Furthermore, implementation quality significantly contributes to strengthening policy effectiveness and enhancing local economic outcomes. It also functions as a mediating mechanism through which collaboration and regulatory capacity influence both public policy effectiveness and economic performance. These results demonstrate that the effects of collaboration and regulatory capacity operate not only directly but also indirectly through improvements in implementation quality. The study underscores that successful public policy and improved regional economic performance at the municipal level depend substantially on the alignment of intergovernmental collaboration, sufficient regulatory capacity, and robust implementation quality. The findings offer practical implications for reinforcing local governance structures to promote sustainable regional economic development.