What determines economic growth in the split province in Indonesia?
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Abstract
Purpose: This study aims to analyze the determinants of economic growth in split provinces of Indonesia, focusing on household consumption, investment, government spending, and taxes.
Methodology: The research employs panel data regression analysis using data from 25 split provinces in Indonesia from 2014-2022. The Fixed Effect Model (FEM) was determined as the best model through Chow and Hausman tests.
Results: The findings indicate that household consumption, investment, goods and services spending, and taxes have significant positive effects on economic growth in split provinces. Conversely, capital spending shows a significant adverse effect on economic growth.
Theoretical contribution: This study contributes to the literature on regional economic growth by providing empirical evidence on the determinants of economic growth, specifically in the context of split provinces in Indonesia. It highlights the differential impacts of various economic factors on newly formed administrative regions.
Practical implications: The results suggest local governments should focus on creating a conducive investment climate, optimizing tax collection, and carefully allocating spending to promote economic growth in split provinces. The negative effect of capital spending underscores the need for more effective and efficient use of these funds.
Sustainable Development Goals (SDGs): SDG 8: Decent Work and Economic Growth
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This work is licensed under a Creative Commons Attribution 4.0 International License.
This work (article) is licensed under a Creative Commons Attribution 4.0 International License.
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