Does the Covid-19 Outbreak Impacts On Economic Growth? An Evidence from Indonesia

Abstract

This study aims to analyze the effectS of the COVID-19 pandemic, labor, domestic direct investment (DDI), AND foreign direct investment (FDI) on economic growth in Indonesia. The type of data used in this study is panel data, which is a combination of cross-section and THE time series data (Silvia, 2020). The cross-section data involves 34 provinces and time-series data covers the period from the first quarter of 2018 to the second quarter of 2021. The result found out that the regression coefficient of labor has a positive and significant effect at the 5 percent level, which means that if the number of workers increases by 1 percent, economic growth will increase by 0.03 percent. Furthermore, the FDI variable also has a significant and positive effect on economic growth in Indonesia. We can see in table 3.2 that the FDI variable is significant at the 5 percent level with a regression coefficient of 0.012, this means that an increase in FDI by 1 percent will accelerate economic growth by 0.012 percent. From the results of data processing obtained by the author, it can be seen that the DDI variable has a positive but not significant effect on economic growth in Indonesia, this can be seen from the p-value which is greater than 5 percent. The regression coefficient of -0.001 proves that the COVID-19 pandemic has a negative impact on economic growth in Indonesia. When the COVID-19 pandemic reached the territory of Indonesia, economic growth slowed by 0.001 percent.

Does Economic Growth Mediate Investment, Inflation, and Human Development Investment on Poverty in Indonesia?

“…This result is by the theory described in the Harrod-Domar Model which was adopted from the Keynesian Theory regarding economic growth states that more savings and investments increase the economy. This result is also consistent with the findings of the research conducted by Arshanti (2015), Ibrahim (2016) in Somalia, Akisik et al (2020) in Africa and Aprina et al (2021) in Indonesia. However, only foreign direct investments had a significant effect on economic growth while the effect of domestic investments was not significant in Indonesia.…”

“…The author views research on macroeconomic variables on economic growth and poverty as a very interesting topic to discuss. Although many previous researchers both from within and from outside the country with various methods and variables have tried to analyze how the influence occurs between the variables such as those conducted by Ahmad & Riaz (2012), Ogunniyi and Igberi (2014), Ibrahim (2016), Akisik et al (2020), Akhmad et al (2018) and Aprina et al (2021). Several previous poverty studies were also conducted by Mahfuzah et al (2020), Suriani et al (2020), Wintara et al (2021), andFitriady et al (2022) related households poverty, socio-economic and demographic, inequality, and macroeconomics variables by using the ARDL, Panel, and Panel Cointegration model.…”