The paper analyzes the effect of public expenditure and the implementation of local autonomy policy on Human Development Index (HDI). The paper uses Principal Component Regression Analysis to conduct the analysis. The result shows that public expenditure has a positive effect on HDI. It also finds that the increase in HDI is bigger post the implementation of local autonomy policy. The elasticity of each coefficient of public expenditure are as follows: 1.58 for agriculture sector; 0.94 for education sector; 0.36 for health sector; 0.44 for housing sector; 0.61for infrastructure sector, and 0.70 for GRDP.