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"The Inpres program basically is one of the Government's effort to strengthen the capacities of the regional Government to plan and implement development projects which met the needs of the region by providing direct access to local agencies to substantial public resources, as well as to narrow the gap of economic development between regions. However, the diversity of regional economic activity in Indonesia have caused a large variations in the region's ability to make the most of Inpres program. It is obvious that the diversity between regions could be a simple explanation of why the `effectiveness' of Inpres program varies across regions, that is, of why Inpres gives a substantial stimulus to development in some regions and has a nautral or even negative effect in other. That is the principal focus of this study, which aims to analyzes how far the Inpres program could achieve its objective effectively. According to the Paul Mosley's model, it is substantiated that the effectiveness of aid such as Inpres program is determined by several ultimates parameters which are related to the share of aid allocated to recurrent budget, the side-effect of aid on private sector and the ratio of changes in output to changes in private capital stocks and government capital stocks. Empirically, the study shows that Inpres program has some kind of straightforward `leverage' on regional economic development especially for the regions with high rate of growth. In other words, the effectiveness of aid is high in the region with high growth rate."