Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.no11.147

Determinants of Economic Growth in Indonesia: A Dynamic Panel Model  

BASUKI, Agus Tri (Economics and Business Faculty, Universitas Sebelas Maret)
PURWANINGSIH, Yunastiti (Economics and Business Faculty, Universitas Sebelas Maret)
SOESILO, Albertus Maqnus (Economics and Business Faculty, Universitas Sebelas Maret)
MULYANTO, Mulyanto (Economics and Business Faculty, Universitas Sebelas Maret)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.11, 2020 , pp. 147-156 More about this Journal
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.
Keywords
Dynamic Panels; Economic Growth; Fiscal Policy; Public Spending;
Citations & Related Records
Times Cited By KSCI : 8  (Citation Analysis)
연도 인용수 순위
1 Afzal, M. (2012). Relationship among Education, Poverty and Economic Growth in Pakistan: An Econometric Analysis. Journal of Elementary Education, 22(1) 23-45
2 Armas, E. B., Osorio, C. G., Moreno-Dodson, B., & Abriningrum, D. E. (2012). Agriculture Public Spending and Growth in Indonesia. Washington, DC: The World Bank. doi:10.1596/1813-9450-5977
3 Al-Shatti, A. S. (2014). The Impact of Public Expenditures on Economic Growth in Jordan. International Journal of Economics and Finance, 6(10), 157-167.DOI:10.5539/ijef.v6n10p157.
4 Barro, R. J. (1991). Economic Growth in a Cross Section of Countries. The Quarterly Journal of Economics, 106(2), 407-443.   DOI
5 Bloom, D. E., Canning, D., & Fink, G. (2010). Implications of Population Ageing for Economic Growth. Oxford Review of Economic Policy, 26(4), 583-612. doi.org/10.1093/oxrep/grq038   DOI
6 Brempong, K. G. (2002). Corruption, Economic Growth and Income Inequality in Africa. Econ. Gov. 3, 183-209. DOI:10.1007/s101010200045.   DOI
7 Dada, M. A. (2013). Composition Effects of Government Expenditure on Private Consumption and Output Growth in Nigeria: A Single-Equation Error Correction Modelling. Romanian Journal of Fiscal Policy, 4(2), 18-34.
8 Deswantoro, D. B., Ismail, A., & Hendarmin, H. (2017). The Influence of Regional Expenditure Based on Economic Classification on Economic Growth and Community Welfare in Regency / City of West Kalimantan Province in 2010-2015. Journal of Business Economics and Entrepreneurship. 6(3), 187-210.
9 Dudzeviciute, G., Simelyte, A., & Liucvaitiene, A. (2018). Government Expenditure and Economic Growth in The European Union Countries. International Journal of Social Economics. doi: 10.1108/IJSE-12-2016-0365.
10 Dogan, E., & Tang, T. C. (2006). Government Expenditure and National Income: Causality Tests for Five South East Asian Countries. International Business & Economics Research Journal, 5(10). DOI https://doi.org/10.19030/iber.v5i10.3516
11 Engle, R. F., & Granger, C. W. J. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica: Journal of the Econometric Society, 55, 251-276.   DOI
12 Gisore, N. (2014). Effect of Government Expenditure on Economic Growth in East Africa: A Disaggregate Model, European Journal of Business and Social Science, 3(8), 289-304.
13 Ibhagui, O. (2020). How Does Foreign Direct Investment Affect Growth in Sub-Saharan Africa? New Evidence from Threshold Analysis. Journal of Economic Studies. https://doi.org/10.1108/JES-06-2018-0198
14 Maddala, G. S., & Wu, S. (1999). A Comparative Study of Unit Root Tests With Panel Data and A New Simple Test. Oxford Bulletin of Economics and Statistics, 61(S1), 631-652.   DOI
15 Kao, C., Chiang, M. H., & Chen, B. (1999). International R&D Spillovers: An Application of Estimation and Inference in Panel Cointegration. Oxford Bulletin of Economics and statistics, 61(S1), 691-709.   DOI
16 Kosor, M. M., Perovic, L. M., & Golem, S. (2019). Efficiency of Public Spending on Higher Education: A Data Envelopment Analysis for EU-28. Problems of Education in the 21st Century, 77(3), 396. DOI: 10.33225/pec/19.77.396.   DOI
17 Li, H., & Liang, H. (2010). Health, Education, and Economic Growth in East Asia. Journal of Chinese Economic and Foreign Trade Studies. doi: 10.1108/17544401011052267
18 Mauro, P. (1995). Corruption and Growth, The Quarterly Journal of Economics, 110(3), 681-712.   DOI
19 Mo, P. H. (2001). Corruption and Economic Growth. Journal of Comparative Economics, 29(1), 66-79. doi:10.1006/jcec.2000.1703   DOI
20 Murova, O., & Khan, A. (2017). Public Investments, Productivity and Economic Growth: A Cross-State Study of Selected Public Expenditures in The United States. International Journal of Productivity and Performance Management, 66, 251-265. http://dx.doi.org/10.1108/IJPPM-12-2015-0190   DOI
21 Nawatmi, S. (2013). Corruption and Economic Growth-Empirical Studies 33 Provinces in Indonesia, Journal of Accounting Dynamics, Finance and Banking, 2(1), 66-81.
22 Nguyen, L. P., & Pham, V. H. T. (2020). Trade of ICT Products, Government, and Economic Growth: Evidence from East Asia-Pacific Region. Journal of Asian Finance, Economics and Business, 7(8), 175-183. https://doi.org/10.13106/jafeb.2020.vol7.no8.175   DOI
23 Olabisi, A. S., & Oloni, E. F. (2012). Composition of Public Expenditure and Economic Growth in Nigeria. Journal of Emerging Trends in Economics and Management Sciences, 3(4), 403-407.
24 Olilingo, F. Z., & Putra, A. H. P. K. (2020). How Indonesia Economics Works: Correlation Analysis of Macroeconomics in 2010-2019. Journal of Asian Finance, Economics and Business, 7(8), 117-130. https://doi.org/10.13106/jafeb.2020.vol7.no8.117   DOI
25 Oyinbo, O., Zakari, A., & Rekwot, G. Z. (2013). Agricultural Budgetary Allocation and Economic Growth in Nigeria: Implications for Agricultural Transformation in Nigeria. Consilience, (10), 16-27.
26 Sandip, S., Krishna Murthy, I., & Asmita, C. (2020). Sectoral Contribution to Economic Development in India: A Time-Series Co-Integration Analysis. Journal of Asian Finance, Economics and Business, 7(9), 191-200. https://doi.org/10.13106/jafeb.2020.vol7.no9.191   DOI
27 Sylwester, K. (2000). Income Inequality, Education Expenditures and Growth. Journal of Development Economics, 63(2), 379-398. DOI: 10.1016/S0304-3878(00)00113-9   DOI
28 Srinivasan, P. (2013). Causality Between Public Expenditure and Economic Growth: the India Case. International Journal of Economics and Management, 7(2), 335-347.
29 Srithongrung, A., & Kriz, K. A. (2014). The Impact of Subnational Fiscal Policies on Economic Growth: A Dynamic Analysis Approach. Journal of Policy Analysis and Management, 33(4), 912-928. Doi: 10.1002/pam.21784   DOI
30 Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and Statistics, 61(S1), 653-670.   DOI
31 Tariq, R., Khan, M. A., & Rahman, A. (2020). How Does Financial Development Impact Economic Growth in Pakistan? New Evidence from Threshold Model. Journal of Asian Finance, Economics and Business, 7(8), 161-173. https://doi.org/10.13106/jafeb.2020.vol7.no8.161   DOI
32 Okoroafor, M. O., & Nwaeze, C. (2013). Poverty and Economic Growth in Nigeria 1990-2011. The Macrotheme Review, 2(6), 105-115.