Indonesia's Economic Growth Rate

Abstract

Economic growth can be a benchmark for a country's welfare and play a role as a determinant and direction for future development. This study aims to analyze the factors that influence the economic growth of 6 islands in Indonesia (Sumatra, Java, Bali and Nusa Tenggara, Borneo, Sulawesi, Maluku and Papua). The following factors were selected for analysis: government expenditure, non-oil and gas exports, investment, population, and the number of workers. This study used secondary data from publications by Bank Indonesia, the Central Statistics Agency (BPS), the Investment Coordinating Board, the World Bank, and other relevant institutions. The collected data covers the period from 2011 to 2020. This study used quantitative descriptive analysis methods with panel data regression analysis. The results of the regression of panel data show that variables of government spending, investment, and non-oil and gas exports did not have a significant influence on economic growth. In contrast, the number of people and the number of workers significantly influenced the economic growth of 6 islands in Indonesia during the analyzed period. The island with the highest economic growth rate is Sulawesi Island, while Borneo Island has the lowest economic growth rate among the six islands in Indonesia. The development of government spending and the highest value of non-oil and gas exports were led by Jawa Island, while the lowest value came from Bali and Nusa Tenggara islands. In addition, due to the rapid development of the population and becoming an industrial centre area, Jawa Island also has the highest investment development, a dense population and the most labour compared to other islands. Meanwhile, the opposite condition occurs in Maluku Island and Papua.