A Search for Indonesia's Regional Growth Determinants

Abstract

The discussion on income disparity among regions has emphasized the need for research in finding Indonesia's regional growth determinants. This study investigates the determinants of Indonesia's provincial growth of income per capita and discusses some issues related to the appropriate regional growth model estimation that utilizes GMM dynamic panel estimation. Gross regional domestic product (GRDP) per capita is the income proxy in this study, while several indicators, such as trade openness, infrastructure, and local government spending, serve as factors for growth. These are also supported by the usual determinants such as investment, human capital and population growth. The result points at transportation infrastructure, trade openness and human capital as important provincial growth determinants.