Effect of Unemployment Rate, Inequality and Investment Against Economic Growth on The Island of Sumatra

Abstract

This study aims to analyze and empirically prove the effect of unemployment rate, inequality, and investment on economic growth on the island of Sumatra in a recently half of decade. Using panel dataset among N=154 districts/cities as entities on the island of Sumatra in the span period of six years (2015-2020), this study utilizes econometric panel model of multiple linear regression. This research suggests that the variables of unemployment rate and inequality density have a significantly negative correlation with economic growth on the island of Sumatra. Meanwhile, investment rate has positively significantly correlated with economic growth on the island of Sumatra. However, this study also has several limitation such follow: firstly, this study only uses three independent variables (unemployment, inequality, and investment) meanwhile not afford other factors or variables outside the model which may also affect the dependent variable (economic growth). Despite several limitations, this research contributes as equal as an input and evaluation for stakeholders in making policies (Government and Regional Government) so that they can produce more targeted policies in an effort to increase economic growth, especially for Regional Governments on the Island of Sumatra.