IMPACT OF INFRASTRUCTURE DEVELOPMENT ON ECONOMIC GROWTH: THE CASE OF CENTRAL JAVA, INDONESIA (PANEL DATA 2004-2011)
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Institusion
Universitas Padjadjaran
Author
Ardiani, Gadis Octavia
Subject
Datestamp
2021-11-23 00:00:00
Abstract :
This study investigates the impact of road, electricity, and education infrastructure on economic growth. Road and electricity infrastructure represents economic infrastructure, and education infrastructure represents social infrastructure. The estimation uses balance panel data that covered 35 regions in Central Java from 2004 to 2011. Using the physical infrastructure as the independent variable for determining growth, the results suggest that road, electricity, and education infrastructure have a positive and significant influence on economic growth. Inconsistent with previous studies, roads do not show the greatest impact on economic growth as compared to electricity and education. Among the three infrastructure variables, electricity shows the greatest contribution to economic growth. Considering the importance of infrastructure, local governments in Central Java should develop their infrastructures. What is needed today is not only a change in the quantity and quality of infrastructure, but also a reduction in the inequality and uneven distribution of infrastructure. Local governments need to focus on infrastructure development, specifically electricity in the sense that many areas have low power supply, especially in Demak Regency, Wonosobo Regency, and Rembang Regency. In terms of education, governments need to build more schools because education strongly affects economic growth. A lack of adequate infrastructure is an impediment to the development of the wider economy. Governments need to allocate a certain budget for the construction and maintenance of infrastructure.
This study investigates the impact of road, electricity, and education infrastructure on economic growth. Road and electricity infrastructure represents economic infrastructure, and education infrastructure represents social infrastructure. The estimation uses balance panel data that covered 35 regions in Central Java from 2004 to 2011. Using the physical infrastructure as the independent variable for determining growth, the results suggest that road, electricity, and education infrastructure have a positive and significant influence on economic growth. Inconsistent with previous studies, roads do not show the greatest impact on economic growth as compared to electricity and education. Among the three infrastructure variables, electricity shows the greatest contribution to economic growth. Considering the importance of infrastructure, local governments in Central Java should develop their infrastructures. What is needed today is not only a change in the quantity and quality of infrastructure, but also a reduction in the inequality and uneven distribution of infrastructure. Local governments need to focus on infrastructure development, specifically electricity in the sense that many areas have low power supply, especially in Demak Regency, Wonosobo Regency, and Rembang Regency. In terms of education, governments need to build more schools because education strongly affects economic growth. A lack of adequate infrastructure is an impediment to the development of the wider economy. Governments need to allocate a certain budget for the construction and maintenance of infrastructure.
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