THE DYNAMICS MODEL OF CROSS-REGIONAL TO ENHANCE ECONOMIC GROWTH: NEW EMPIRICAL EVIDENCE FROM INDONESIA
DOI:
https://doi.org/10.2478/eoik-2024-0046Keywords:
economic growth, technological progress, population, in- vestment, human capital, open economic, structural change, income inequality, Dynamic ModelAbstract
Economic growth growth is crucial to improve community welfare in
the long term. Although Indonesia’s economic growth is on an upward
trend, Indonesia must remain vigilant in its relationship with the glob-
al world due to the rapidly changing and highly uncertain dynamics.
Indonesia’s economic growth is also inseparable from the influence of
various provinces’ economic growth, which varies due to the econom-
ic dynamics between regions. These dynamics can influence the re-
gion’s contribution to national economic growth. Therefore, identify-
ing the important role of the determining factors of economic growth
and appropriate policies in dealing with economic dynamics between
regions is crucial because sustainable economic growth is also essen-
tial for improving community welfare. This study examines the deter-
minants of Indonesia’s economic growth from a regional economic
perspective, using a Dynamic Panel Data analysis model with three
estimation models. The first model focuses on the primary variables of
technological progress, population, and investment. The second mod-
el adds the human capital variable, while the third model further in-
corporates the variables of open economy, economic structure chang-
es, and income inequality. The study utilizes data from the Indonesian
Central Statistics Agency, covering 27 provinces from 2015 to 2022.
The results indicate that increased technological progress, population,
investment, human resources, economic openness, and economic
structure changes can increase economic growth, while inequality of
income harms economic growth. This research has implications that
in creating determinant conditions for conducive economic growth, it
needs to be carried out evenly in all provinces in Indonesia.
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