IMPACT ANALYSIS OF INVESTMENT VALUE ON METAL MINING SECTOR TO GROSS DOMESTIC REGIONAL PRODUCT OF PAPUA PROVINCE USING VECTOR AUTOREGRESSION (VAR)

• Main Author: Arapenta Ginting, Fandi
• Format: Theses
• Language: Indonesia
• Subjects: Karya Umum
• Online Access: https://digilib.itb.ac.id/gdl/view/44111
• Institution: Institut Teknologi Bandung

Mining is characterized by capital intensive industry. Capital cost or investment are paid by the holder of mining permit since general prospecting stage to mining operation stage. Generally, that investment will give some impacts to community or region surrounding mining area. Those impacts are the increasing of economic activity and job opportunity, the increasing of national or regional income, and the increasing of public welfare. Regarding the investment in mining sector, this research will evaluate the effect of investment on metal mining sector to the regional economy in Papua Province. Vector Autoregression (VAR) model will be applied for research methodology by examining Impulse Response Function (IRF) and Variance Decomposition (VD). Those VAR model will apply following variables; Investment, Total Gross Domestic Regional Product (GDRP), GDRP of mining sector, GDRP of agriculture sector, GDRP of construction sector, GDRP of manufacture sector, Labor of mining sector, Labor of agriculture sector, Labor of construction sector, and GDRP of manufacture sector. The result of IRF and VD indicated that investment in metal mining sector cause positive impact on Total GDRP, GDRP of mining sector, GDRP of agriculture sector, and GDRP of manufacture sector. However, those investment cause negative impact on GDRP of construction sector. Furthermore, evaluation on linkage between mining sector and the other economic sectors indicated the increasing of GDRP of mining sector have not yet cause positive impact to Total GDRP, GDRP of construction sector, and GDRP of manufacture sector. Only GDRP of agriculture sector get positive impact of the increasing on GDRP of mining sector. Evaluation on multiplier of investment in metal mining sector in term of labor requirement indicated Labor of mining sector cause positive impact only on Total GDRP and GDRP of mining sector. The research concludes the investment in Papua Province should be boosted for the other potential sector such as agriculture, construction, and manufacture. Those investment is needed to improve GDRP of potential sectors so that increase almost equal to GDRP of mining sector.