Infrastructure Development and Economic Growth in Indonesia: A Province Panel Data Analysis

Samosir, Perak and Rajagukguk, Wilson (2020) Infrastructure Development and Economic Growth in Indonesia: A Province Panel Data Analysis. International Journal of Innovation, Creativity and Change, 14 (10). pp. 309-318. ISSN 2201 1323

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Abstract

Infrastructure development is considered as a factor that promotes development. On the other side, inequality in infrastructure development can cause economic growth disparity. This study aims to investigate the impacts of infrastructure development on economic growth disparity across provinces in Indonesia that today consists of 34 provinces. The data used came from the Indonesia Database for Policy and Economic Research (INDO-DAPOER) of the World Bank. The analysis employed the random effects regression model for panel data. The dependent variable was GDP per capita without oil and gas (constant price, million rupiah), while the independent variables were household access to electricity (total in % of total household), literacy rate for population age 15 and over (in % of total population), and birth attended by skilled health worker (in % of total birth). The results of the study show that higher economic growth is associated with better infrastructure development, that is higher household access to electricity, higher literacy rate for population age 15 and over, and higher birth attended by skilled health worker. Disparity in economic growth across provinces was also indicated by the difference in constant for each province in the model.

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