Determinants of Economic Growth In Indonesia: A Dynamic Panel Approach

ABSTRACT

This study aims to analyze the composition of local government spending (education, health, marine and fisheries, agriculture, and general allocation funds), the number of poor people, rate of inflation, foreign direct investment and opinion Supreme Audit Agency against the Local Government Financial Report to economic growth in selected provinces in Indonesia. This study employs data of 18 selected provinces in Indonesia from 2010 to 2015. This research uses dynamic panel regression (dynamic VECM). The results suggest that in the long run are all variables affecting economic growth except for government spending on agriculture. In addition, the short-run relationship shows that government budget for education has short-run relationship in lag 1, government budget for agriculture in lag 2, government budget for marine and fishery in lag 2, central government funding funds to local governments in lag 2, direct investment of foreign capital in lag 1, and total population in lag 2.

KEYWORDS

Economics growth, VECM, selected provinces, and Indonesia.

Cite this paper

Agus Tri Basuki, A. M. Soesilo. (2020) Determinants of Economic Growth In Indonesia: A Dynamic Panel Approach. International Journal of Economics and Management Systems, 5, 178-192