The Effects of Electricity Consumption on Electrification Access on Economic Growth in Papua Province, Indonesia

Abstract

The current research aims to analyze the influence of electricity and infrastructure on regional economy. The study empirically tested the impact of the independent constructs on electrification access and economic growth in Papua, Indonesia by using mediating role of electricity consumption. Independent variables examined in this study are electrical installations and electricity capital, while the dependent variables are measured by using labor absorption. This study specifically investigates the relationship between these variables with a cross-sectional study model, conducted at Papua Province, Indonesia with data from 2012 to 2016. The results show that electricity consumption in Papua Province is significantly influenced by electrical installation, household electricity capital and industrial electricity capital. Furthermore, electricity consumption in general affects employment. The test of the mediating variable shows the role of the consumption variable in the ratio of electrification and employment. Theoretical implication posed from the findings is about the relationship between economic growth and energy infrastructure which is more likely to attract both domestic and foreign investment in a region. The novelty of this research is to reveal the role of electrification in industrialization and employment.