ANALYSIS SPATIAL SPILLOVER EFFECTS OF REGIONAL ECONOMIC GROWTH IN INDONESIA

• Main Author: Nur Anggraeni, Fitria
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/70450
• Institution: Institut Teknologi Bandung

This study aims to determine the effect of spatial spillover effects on regional economic growth in all districts/cities in Indonesia. As an autonomous state, local governments have the authority to regulate their regions, including achieving regional development goals. Economic growth is expected to create prosperity for the community by creating jobs, reducing poverty, and equitable development. However, economic growth in the regions varies widely. Some areas have very high economic growth and vice versa. On the one hand, the economic development of a region is closely related to the economic potential and characteristics possessed by the region as well as the linkages of economic activities between the surrounding regions. Therefore, it is necessary to carry out an analysis of the spillover effect or the spatial spillover effect of the factors that drive economic growth in a region to formulate an appropriate development planning strategy. The novelty of this research is the analysis include direct and indirect spillover effects of economic growth in other regions and their determinants of all regions in Indonesia. This study uses secondary data from the BPS and the Ministry of Finance in 514 regencies/cities for the period 2015 to 2019 which are averaged into cross-sectional data, then combined with spatial data via geodes to be processed into spatial regression using R Jupiter python. The dependent variable is GRDP per capita and the independent variables consist of government spending per capita, Gross Fixed Capital Formation, net exports, the ratio of local revenue to total income, the average length of schooling, and the share of industry to total GRDP. The results of the research show that there are spatial effects of economic growth in the regions. Statistically, an increase in the per capita GRDP of an area will affect the economic growth of the surrounding area or neighboring regions. In aggregate and significant positive, variables Per capita Government Expenditure, Share of Processing Industry, and Net Exports have a direct spillover effect on economic growth in a region. While the variables of Average Length of School and Gross Fixed Capital Formation not only have a direct effect but also have an indirect effect on the growth of neighboring regions. The regional original income ratio variable has a significant indirect effect on neighboring economic growth or vice versa. Therefore, there is a need for the management of government spending, incentives and facilities, and infrastructure to encourage industrial processing and ease of access to education for the community. This study still has limitations such as endogeneity of model, limitations in selecting neighboring matrices, and limited research time so further research is needed.