Determinant of Economic Growth in Indonesia: Panel VECM Approach
This study aims to analyze the composition of local government spending (education, health, marine and
fisheries, agriculture, and general allocation funds), the number of poor people, and foreign direct investment. This study
uses data from 18 provinces in Indonesia from 2010 to 2015. The analysis method used in this research is dynamic panel
regression (dynamic VECM). Long-term analysis results are all variables affecting economic growth, except government
spending on agriculture. In short-term relations, local government budget for health in lag 2, government budget for marine
and fishery in lag 1 and lag 2, have a positive influence on gross regional domestic product. While foreign direct investment
in lag 2, and total poverty in lag 1 and 2 have a negative effect on grossrfdf domestic regional product.
Keywords - Local Government Expenditures, Dynamic VECM And Gross Domestic Regional Bruto.