Human Capital and Regional Economic Growth in Indonesia: A Spatial Analysis Approach

https://doi.org/10.22146/ijg.88241

Kikin Windhani(1*), Yunastiti Purwaningsih(2), Tri Mulyaningsih(3), Bhimo Rizky Samudro(4), Fajar Hardoyono(5)

(1) Faculty of Economics and Business, Universitas Jenderal Soedirman, Purwokerto, Indonesia
(2) Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta, Indonesia
(3) Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta, Indonesia
(4) Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta, Indonesia
(5) Faculty of Islamic Education and Teacher Training, Universitas Islam Negeri Profesor Kiai Haji Saifuddin Zuhri, Purwokerto, Indonesia
(*) Corresponding Author

Abstract


Endogenous growth theory assumes that human capital is a prominent factor in regional economic growth. However, the imbalance of human capital between regions is still a major problem in economic growth in Indonesia. Previous studies on regional economic growth have recognized the importance of considering spatial aspects as a determinant of regional economic growth. The geographical area in the form of an archipelago with a large number of administrative districts and cities produces pros and cons regarding the influence of spatial aspects on the regional growth of urban districts. This study aims to analyze the distribution of human capital using the Alternative Human Development Index (AHDI) approach and the effect of human capital and spatial aspects on the regional economic growth of urban districts in Indonesia within the framework of endogenous growth theory. The research method uses geometric mean to measure the Alternative Human Development Index, Geographic Information System (GIS) to see the distribution of human capital and regional economic growth in Indonesia, and the spatial regression Spatial Autoregressive Moving Average (SARMA) used to analyze the spatial aspects of human capital and regional economic growth in Indonesia. The results show that human capital in Indonesia is still unequal between the western and eastern parts of Indonesia. Human capital and spatial factors have positive effects and are the most influential determinants of Indonesia's regional economic growth, as indicated by the value of the spatial lag weight matrix of the dependent variable (ρ) and the spatial error term (λ) that is positive.

 


Keywords


human capital; alternative human development index; spatial aspects; regional economic growth; regional inequality

Full Text:

PDF


References

Adam, L., & Dharma Negara, S. (2015). Improving Human Capital through Better Education to Support Indonesia’s Economic Development. Economics and Finance in Indonesia, 61(2).

Affandi, Y., Anugrah, F. D., & Bary, P. (2019). Human Capital and Economic Growth Across Regions: a Case Study in Indonesia. Eurasian Economic Review, 9(3), 331–347. https://doi.org/10.1007/s40822-018-0114-4

Agusalim, L., Anggraeni, L., & Pasaribu, S. H. (2022). The Economy of Indonesia: Driven by Physical or Human Capital? Jejak, 15(1), 10–28. https://doi.org/10.15294/jejak.v15i1.34418

Agussabti, A., Rahmaddiansyah, R., Hamid, A. H., Zakaria, Z., Munawar, A. A., & Abu Bakar, B. (2022). Farmers’ perspectives on the adoption of smart farming technology to support food farming in Aceh Province, Indonesia. Open Agriculture, 7(1), 857–870. https://doi.org/10.1515/opag-2022-0145

Ahumada, V. M. C., & Villarreal, C. C. (2019). Human capital formation and economic growth across the world: a pnel data econometric approach. Economía Sociedad y Territorio, xx, 25–54.

Akita, T., & Miyata, S. (2018). Spatial Inequalities in Indonesia, 1996–2010: A Hierarchical Decomposition Analysis. Social Indicators Research, 138(3), 829–852. https://doi.org/10.1007/s11205-017-1694-1

Ali, M., Egbetokun, A., & Memon, M. H. (2018). Human capital, social capabilities and economic growth. Economies, 6(1), 1–18. https://doi.org/10.3390/economies6010002

Amaluddin, A., Payapo, R. W., Laitupa, A. A., & Serang, M. R. (2018). A modified human development index and poverty in the villages of west seram regency, Maluku province, Indonesia. International Journal of Economics and Financial Issues, 8(2), 325–330.

Anselin, L. (1988). Spatial Econometrics: Methods and Models. In Spatial Econometrics: Methods and Models. Kluwer Academic Publisher. https://doi.org/10.1111/j.1468-0262.2004.00558.x

Anselin, Luc. (2003). Spatial externalities, spatial multipliers, and spatial econometrics. International Regional Science Review, 26(2), 153–166. https://doi.org/10.1177/0160017602250972

Anwar, A. (2017). Ketimpangan Spasial Pembangunan Ekonomi Dan Modal Manusia Di Pulau Jawa: Pendekatan Explatory Spatial Data Analysis. Asian Journal of Innovation and Entrepreneurship, 2(2), 90–109. https://doi.org/10.20885/ajie.vol2.iss2.art2

Anwar, A. (2018). Empirical Analysis of Human Capital Convergence in Indonesia. Jejak, 11(2), 306–322. https://doi.org/10.15294/jejak.v11i2.16053

Aritenang, A. F., & Chandramidi, A. N. (2023). The spatial effects of fiscal decentralization on regional convergence: the case of regions in indonesia. GeoJournal, 88(2), 2011–2030. https://doi.org/10.1007/s10708-022-10724-2

Aspiansyah, A., & Damayanti, A. (2019). Model Pertumbuhan Ekonomi Indonesia: Peranan Ketergantungan Spasial. Jurnal Ekonomi Dan Pembangunan Indonesia, 19(1), 62–83. https://doi.org/10.21002/jepi.v19i1.810

Banerjee, A., Duflo, E., & Qian, N. (2020). On the Road: Access to Transportation Infrastructure and Economic Growth in China. Journal of Development Economics, 102442. https://doi.org/10.1016/j.jdeveco.2020.102442

Bangun, W. (2020). Employee production factor in economic development (a study in Indonesia). Journal of Computational and Theoretical Nanoscience, 17(2–3), 859–863. https://doi.org/10.1166/jctn.2020.8731

Barro, R. J. (2001). Human Capital and Growth. American Economic Review, 91(2), 12–17.

Barro, R. J., Caselli, F., & Lee, J. W. (2013). Symposium on human capital and economic development: An introduction. Journal of Development Economics, 104, 181–183. https://doi.org/10.1016/j.jdeveco.2013.05.003

Bourgoin, M. A. S. (2014). A proposal for a modified Human Development Index. CEPAL Review, 29–44. https://doi.org/10.18356/ea3f94ea-en

BPS Statistics Indonesia. (2021). Statistical Yearbook of Indonesia 2022. BPS-Statistics Indonesia.

Brody, C., Harrison, N., & Yi, S. (2023). Income loss and gender-based violence during the COVID-19 pandemic among female entertainment workers in Cambodia: a cross-sectional phone survey. BMC Public Health, 23(1). https://doi.org/10.1186/s12889-023-15044-9

Bucci, A., & Segre, G. (2011). Culture and human capital in a two-sector endogenous growth model. Research in Economics, 65(4), 279–293. https://doi.org/https://doi.org/10.1016/j.rie.2010.11.006

Chen, P. P., & Gupta, R. (2009). An Investigation of Openness and Economic Growth Using Panel Estimation. Indian Journal of Economics, 89, 355–483.

Dewanta, A. S., Santoso, R. P., & Anwar, A. (2017). Contribution of Human Capital In Economic Growth of A Regency / City. Prosiding SNaPP2017 Sosial, Ekonomi, Dan Humaniora, 500–509.

Dicker, D., Nguyen, G., Abate, D., Abate, K. H., Abay, S. M., Abbafati, C., Abbasi, N., Abbastabar, H., Abd-Allah, F., Abdela, J., Abdelalim, A., Abdel-Rahman, O., Abdi, A., Abdollahpour, I., Abdulkader, R. S., Abdurahman, A. A., Abebe, H. T., Abebe, M., Abebe, Z., … Murray, C. J. L. (2018). Global, regional, and national age-sex-specific mortality and life expectancy, 1950-2017: A systematic analysis for the Global Burden of Disease Study 2017. The Lancet, 392(10159), 1684–1735. https://doi.org/10.1016/S0140-6736(18)31891-9

Diebolt, C., & Hippe, R. (2019). The long-run impact of human capital on innovation and economic development in the regions of Europe. Applied Economics, 51(5), 542–563. https://doi.org/10.1080/00036846.2018.1495820

Elhorst, J. P. (2014). Spatial Econometrics From Cross-Sectional Data to Spatial Panels. In SpringerBriefs in Regional Science. Springer. https://doi.org/10.1007/978-3-642-40340-8_4

Gujarati, D. N. (2004). Basic Econometrics. In The McGraw-Hill.

Gunawan, A., Mendez, C., & Santos-Marquez, F. (2019). Munich Personal RePEc Archive Regional Income Disparities , Distributional Convergence , and Spatial Effects : Evidence from Indonesia. 97090.

Hjazeen, H., Seraj, M., & Ozdeser, H. (2021). The nexus between the economic growth and unemployment in Jordan. Future Business Journal, 7(1), 1–8. https://doi.org/10.1186/s43093-021-00088-3

Ismail, N. W., & Mahyideen, J. M. (2016). The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia. In SSRN Electronic Journal (Issue 553). https://doi.org/10.2139/ssrn.2709294

Jhingan, M. . (2012). The Economics of Development and Planning (4th ed.). Vrinda Publications (P),Ltd.

Jong-Wha Lee and Hanol Lee. (2018). HUMAN CAPITAL AND INCOME INEQUALITY. In ADBI Working Paper Series.

Kokuytseva, T., & Ovchinnikova, O. (2020). Theoretical aspects of human capital influence on regional development. E3S Web of Conferences, 217, 1–9. https://doi.org/10.1051/e3sconf/202021707017

Leiwakabessy, E., & Amaluddin, A. (2020). A Modified Human Development Index, Democracy And Economic Growth In Indonesia. Humanities & Social Sciences Reviews, 8(2), 732–743. https://doi.org/10.1016/S0305-750X(97)10063-8

LeSage, J., & Pace, R. K. (2009). Introduction to spatial econometrics. In Introduction to Spatial Econometrics. https://doi.org/10.1111/j.1467-985x.2010.00681_13.x

Liu, C., Tu, J., & He, Y. (2023). Measurement of China’s Human Development Index and Analysis of Its Influencing Factors from the Perspective of New Development Concept. Social Indicators Research, 167(1–3), 213–268. https://doi.org/10.1007/s11205-023-03105-w

Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42. https://doi.org/10.1016/0304-3932(88)90168-7

Malau, A. G., & Sembiring, S. A. (2022). The Impact of The Labor Market, Regional Minimum Wages, Investment on The Economic Growth of The Tertier Sector in North Sumatra Province. Quality - Access to Success, 23(191), 290–298. https://doi.org/10.47750/QAS/23.191.33

Márquez, M. A., Lasarte, E., & Lufin, M. (2019). The Role of Neighborhood in the Analysis of Spatial Economic Inequality. Social Indicators Research, 141(1), 245–273. https://doi.org/10.1007/s11205-017-1814-y

Mejía, L. B. (2020). Mining and human capital accumulation: Evidence from the Colombian gold rush. Journal of Development Economics, 145, 102471. https://doi.org/10.1016/j.jdeveco.2020.102471

Messakh, T. A., Rustiadi, E., Putri, E. I. K., & Fauzi, A. (2022). The Impact of Socioeconomic, Government Expenditure and Transportation Infrastructures on Economics Development: The Case of West Timor, Indonesia. International Journal of Sustainable Development and Planning, 17(3), 971–979. https://doi.org/10.18280/ijsdp.170328

Mulyaningsih, T., Miranti, R., Daly, A., & Manning, C. (2019). Regional Skill Differentials: A Study of The Indonesian Labor Market. Singapore Economic Review. https://doi.org/10.1142/S0217590819500371

Munir, S., Elahi, I., & Khan, I. H. (2018). Impact of Human Capital and Infrastructure Development on Economic Growth in Pakistan. European Journal of Economics, Finance and Administrative Sciences, 7(3), 127–140.

Nawir, D., Bakri, M. D., & Syarif, I. A. (2023). Central government role in road infrastructure development and economic growth in the form of future study: the case of Indonesia. City, Territory and Architecture, 10(1). https://doi.org/10.1186/s40410-022-00188-9

Peck, J., Werner, M., & Jones, M. (2022). A dialogue on uneven development: a distinctly regional problem. Regional Studies, 0(0), 1–12. https://doi.org/10.1080/00343404.2022.2116417

Pelinescu, E. (2015). The impact of human capital on economic growth. Procedia Economics and Finance, 22, 184–190. https://doi.org/10.1016/S2212-5671(15)00258-0

Qu, X., & Lee, L. (2015). Estimating a spatial autoregressive model with an endogenous spatial weight matrix. Journal of Econometrics, 184(2), 209–232. https://doi.org/https://doi.org/10.1016/j.jeconom.2014.08.008

Ragdad Cani, M., & Mendez, C. (2020). Human Development Dynamics across Districts of Indonesia: A Study of Regional Convergence and Spatial Approach. SSRN Electronic Journal, 100479. https://doi.org/10.2139/ssrn.3596894

Rahman, M. M., Vu, X.-B. B., & Nghiem, S. (2022). Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles? Sustainability (Switzerland), 14(8). https://doi.org/10.3390/su14084540

Ray, D. (2010). Uneven growth: A framework for research in development economics. Journal of Economic Perspectives, 24(3), 45–60. https://doi.org/10.1257/jep.24.3.45

Rey, S. J. (2001). Spatial empirics for economic growth and convergence. Geographical Analysis, 33(3), 195–214. https://doi.org/10.1111/j.1538-4632.2001.tb00444.x

Ridha, M. R., & Budi, N. (2020). The Effect of Foreign Direct Investment, Human Development and Macroeconomic Condition on Economic Growth: Evidence from Indonesia. Journal of Indonesian Applied Economics, 8(2), 46–54. https://doi.org/10.21776/ub.jiae.2020.008.02.5

Rizaldi, A., Muzwardi, A., Santoso, E., Iffan, M., & Fera, M. (2023). The Strategic Development of Maritime Connectivity In The Border Area In Indonesia. Journal of Eastern European and Central Asian Research, 10(4), 701–711. https://doi.org/10.15549/jeecar.v10i4.1378

Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71–S102. https://doi.org/10.3386/w3210

Sharma, R. (2018). Health and economic growth: Evidence from dynamic panel data of 143 years. PLOS ONE, 13(10), e0204940.

Sofilda, E., Zilal Hamzah, M., & Kusairi, S. (2023). Analysis of fiscal decentralisation, human development, and regional economic growth in indonesia. Cogent Economics and Finance, 11(1). https://doi.org/10.1080/23322039.2023.2220520

Stillwell, J., & Clarke, G. (2006). Applied GIS and Spatial Analysis. In Applied GIS and Spatial Analysis. https://doi.org/10.1002/0470871334

Suparman, S., & Muzakir, M. (2023). Regional inequality, human capital, unemployment, and economic growth in Indonesia: Panel regression approach. Cogent Economics and Finance, 11(2). https://doi.org/10.1080/23322039.2023.2251803

Tamura, R., Dwyer, J., Devereux, J., & Baier, S. (2019). Economic growth in the long run. Journal of Development Economics, 137, 1–35. https://doi.org/10.1016/j.jdeveco.2018.10.010

Teixeira, A. A. C., & Queirós, A. S. S. (2016). Economic growth, human capital and structural change: A dynamic panel data analysis. Research Policy, 45(8), 1636–1648. https://doi.org/https://doi.org/10.1016/j.respol.2016.04.006

Trimborn, T. (2018). On the analysis of endogenous growth models with a balanced growth path. Journal of Mathematical Economics, 79, 40–50. https://doi.org/https://doi.org/10.1016/j.jmateco.2018.09.003

Utami, C. F., Mizuno, K., Hasibuan, H. S., & Budhi Soesilo, T. E. (2022). Discovering Spatial Development Control For Indonesia: A Systematic Literature Review. Geography, Environment, Sustainability, 15(4), 64–79. https://doi.org/10.24057/2071-9388-2021-119

Vidyattama, Y. (2008). Patterns of Provincial Economic Growth in Indonesia (Issue January 2008).

Vidyattama, Y. (2013). Regional convergence and the role of the neighbourhood effect in decentralised Indonesia. Bulletin of Indonesian Economic Studies, 49(2), 193–211. https://doi.org/10.1080/00074918.2013.809841

Vidyattama, Y. (2014). Issues In Applying Spatial Autocorrelation on Indonesia ’ S Provincial Income Growth. Australasian Journal of Regional Studies, 20(2), 375–402.

Wicaksono, E., Amir, H., & Nugroho, A. (2017). The sources of income inequality in Indonesia: A regression-based inequality decomposition. ADBI Working Paper. Econstor, 667, 12.

Windhani, K., Mulyaningsih, T., & Hardoyono, F. (2022). Distribution of Human Capital Between Regions in Indonesia Using the Alternative Human Development Index. KnE Social Sciences 2021 Annual Conference of Indonesian Association for Public Administration, 2022(4), 256–276. https://doi.org/10.18502/kss.v7i5.10554

Xu, Y., & Li, A. (2020). The relationship between innovative human capital and interprovincial economic growth based on panel data model and spatial econometrics. Journal of Computational and Applied Mathematics, 365, 112381. https://doi.org/10.1016/j.cam.2019.112381

Yulianita, A., Susetyo, D., A.K, S., & Azwardi. (2017). Human Capital and Economic Convergence in Indonesia : An Empirical Analysis. International Journal of Scientific and Research Publications, 7(7).



DOI: https://doi.org/10.22146/ijg.88241

Article Metrics

Abstract views : 897 | views : 613

Refbacks

  • There are currently no refbacks.




Copyright (c) 2023 Kikin Windhani

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Accredited Journal, Based on Decree of the Minister of Research, Technology and Higher Education, Republic of Indonesia Number 225/E/KPT/2022, Vol 54 No 1 the Year 2022 - Vol 58 No 2 the Year 2026 (accreditation certificate download)

ISSN 2354-9114 (online), ISSN 0024-9521 (print)

Web
Analytics IJG STATISTIC