Determinants of Economic Growth in Indonesia: A Dynamic Panel Model

Abstract

This study aims to analyze the effect of public spending, macroeconomic variables, and BPK opinion on economic growth. This study is motivated by the inequality of fiscal policy effectiveness between regions in Indonesia in influencing the economic growth of different regions, the ability of local governments to attract foreign investors, and the transparency of regional financial management in designing development programs to encourage regional economic growth. The analytical tool in this study is a dynamic panel regression model with data from 2008 to 2017. The results of this study show that, in the short term, the population affects regional economic growth, while in the long term, the economic growth is affected by the number of people, the poor, General Allocation Fund, health budget, foreign investment and BPK opinion. The findings of this study are that in the long term the General Allocation Fund becomes an obstacle to economic growth, this is because the general allocation funds is widely used to cover the lack of funds for routine regional activities, thereby reducing activities for development programs. Another research finding is that fiscal policies carried out by local governments make a small and ineffective contribution to promoting economic growth.

Determination of Poverty, Unemployment, Economic Growth, and Investment in West Sumatra Province

“…This condition will reduce producers' productivity in producing various types of goods and services, thus having an impact on decreasing the absorption of labor. This decrease in labor absorption implies an increase in unemployment [25].…”

“…Furthermore, the poverty research in Java was expanded by introducing several control variables consisting of the dependency ratio, education, and infrastructure for six provinces in Java in the period 2000-2017. The results showed that the dependency ratio and education significantly affected poverty, while infrastructure had a negative but not significant effect on poverty [25].…”

Analysis of Pre-post Covid-19 Influence in Bangka Belitung Islands Province: Socio-Economic Aspects in 7 Regencies/Cities

“…An increase in economic growth is considered successful if the production of goods and services increases compared to the previous year or vice versa [2]. Economic growth is basically a long-term macro-economic problem that aims to increase real output (national income) and living standards (real income per capita) by covering 3 factors, a) capital; b) manpower; and c) production [3].…”