Value-added Agriculture, Investment, and Infrastructure Development in the Indonesian Economy: VECM Approach

Abstract

This study aimed to determine the impact of the relationship between agricultural value-added on investment and infrastructure development in Indonesia. This study uses data from a period of 36 years, from 1985 to 2020, with vector modeling. This research is based on secondary data from the world bank. We use the variables of value-added agriculture, investment, and infrastructure in Indonesia. The findings of this study indicate that macroeconomic factors such as value-added agriculture, non-financial investment, and infrastructure are all interrelated. Changes in one variable will have an impact on other variables. As the value of agriculture declines, the Indonesian government will boost infrastructure spending. This happens because the decline in the value-added of agriculture in Indonesia can hamper infrastructure