Analysis of Indonesian Economic Growth using System Generalized Method of Moment
Abstract
This study aims to examine the short-term and long-term impacts of household consumption, domestic investment, foreign investment, and government expenditure on regional economic growth across 34 provinces in Indonesia from 2013 to 2022. The method employed is dynamic panel regression using the System Generalized Method of Moments (SYS-GMM). Our result shows that household consumption significantly and positively affects regional economic growth in both the short and long-term. Domestic investment shows a positive impact but is not statistically significant in either the short or long-term. Conversely, foreign investment exhibits a negative impact that is also not statistically significant over both time horizons. Government expenditure demonstrates a positive and significant impact on regional economic growth in both the short and long-term. Effective government policies are therefore necessary across the 34 provinces to foster both domestic and foreign investment.
References
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Nistor, P. (2014). FDI and economic gro owth , the case of Romania. Procedia Economics and Finance, 15(14), 577–582. https://doi.org/10.1016/S2212-5671(14)00514-0
Oseni, I. O. (2016). Exchange rate volatility and private consumption in Sub-Saharan African countries : A system-GMM dynamic panel analysis. Future Business Journal, 2(2), 103–115. https://doi.org/10.1016/j.fbj.2016.05.004
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Soleh, A., & Anitasari, M. (2015). Pengaruh Pengeluaran Pemerintah terhadap Pertumbuhan Ekonomi di Provindi Bengkulu. Ekombis Review, 117–127. https://doi.org/10.37676/ekombis.v3i2.139
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Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51. https://doi.org/10.1016/j.jeconom.2004.02.005
Wiranthi, P. E. (2014). Analisis Determinan Pengeluaran Konsumsi Makro Rumah Tangga Di Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 3(2), 199–212. https://doi.org/10.15408/sigf.v3i2.2063
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Arellano and Bond. (1991). Some tests of specification for panel data:monte carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304-4076(94)01642-D
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Balsalobre, D., & Ali, M. (2020). European commitment to COP21 and the role of energy consumption , FDI , trade and economic complexity in sustaining economic growth. Journal of Environmental Management, 273(August), 111146. https://doi.org/10.1016/j.jenvman.2020.111146
Bank Indonesia. (2014). Laporan Perekonomian Indonesia 2013.
Blundell and Bond. (1998). Reprint of: Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 234, 38–55. https://doi.org/10.1016/j.jeconom.2023.03.001
Bonaccorsi, G., Scotti, F., Pierri, F., Flori, A., & Pammolli, F. (2024). Journal of Economic Behavior and Organization Targeted policies and household consumption dynamics : Evidence from high-frequency transaction data. Journal of Economic Behavior and Organization, 224(August 2023), 111–134. https://doi.org/10.1016/j.jebo.2024.05.017
Caselli, F., Esquivel, G., & Lefort, F. (1996). Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics. Journal of Economic Growth, 1(3), 363–389. https://doi.org/10.1007/BF00141044
Chen, Z., Lv, B., & Liu, Y. (2019). Financial development and the composition of government expenditure : Theory and cross-country evidence. International Review of Economics and Finance, 64(September 2018), 600–611. https://doi.org/10.1016/j.iref.2019.09.006
Cooper, B., Eva, N., Zarea, F., Newman, A., Lee, A., & Obschonka, M. (2020). Addressing common method variance and endogeneity in vocational behavior research : A review of the literature and suggestions for future research. Journal of Vocational Behavior, 121(January 2019), 103472. https://doi.org/10.1016/j.jvb.2020.103472
Esmaeili, P. D. B. L. A. A. (2023). Revisiting the environmental Kuznetz curve and pollution haven hypothesis in N-11 economies: Fresh evidence from panel quantile regression. Environmental Research, 228. https://doi.org/10.1016/j.envres.2023.115844
Fadia Haya, A., Indah Nikensari, S., & Nurjanah, S. (2022). ANALYSIS OF THE INFLUENCE OF CONSUMPTION, INVESTMENT, AND EXPORT ON INDONESIA’S ECONOMIC GROWTH IN THE PANDEMIC YEAR 2020-2021. International Journal of Multidisciplinary Research and Literature IJOMRAL, 1(5), 481–600. https://doi.org/10.53067/ijomral.v1i5.55
Fukase, E. (2010). Revisiting Linkages between Openness, Education and Economic Growth: System GMM Approach. Journal of Economic Integration, 25(1), 194–223. https://doi.org/10.11130/jei.2010.25.1.194
Gujarati, D. (2004). Basic Econometrics. In The Economic Journal (Vol. 82, Nomor 326). https://doi.org/10.2307/2230043
H. Aghasafari. (2021). CO2 emissions, export and foreign direct investment: empirical evidence from Middle East and North Africa Region. The Journal of International Trade & Economic Development, 30 (7), 1054–1076. https://doi.org/10.1080/09638199.2021.1934087
Hakib, A. (2019). Pengaruh Konsumsi Rumah Tangga dan Pengeluaran Pemerintah terhadap Pertumbuhan Ekonomi di Sulawesi Selatan Periode 2012-2016. Jurnal Ekonomi Balance Fakultas Ekonomi dan Bisnis, 15(1), 56–71. https://doi.org/10.47233/jebs.v2i1.129
Hordofa, D. F. (2023). Heliyon Impacts of external factors on Ethiopia ’ s economic growth : Insights on foreign direct investment , remittances , exchange rates , and imports. Heliyon, 9(12), e22847. https://doi.org/10.1016/j.heliyon.2023.e22847
Ibrahim, M., & Arundina, T. (2022). Practical Panel Modelling: With Applications in Islamic Banking and Finance Research (D. G. Dewandaru, D. M. Quraisy, S. . Citra Atrina Sari, M. Nadiah Hidayati, & F. R. S. (ed.); hal. 0–111). National Committee of Islamic Economy and Finance (KNEKS).
Immurana, M. (2020). How does FDI influence health outcomes in Africa? African Journal of Science Technology Innovation and Development, 1–11. https://doi.org/10.1080/20421338.2020.1772952
Irijanto, T. T., & Lestari, D. M. (2022). Peran Investasi, Utang Luar Negeri, dan Inflasi Bagi Pertumbuhan Ekonomi Indonesia (hal. 38–46). https://doi.org/10.23969/jrie.v2i1.26
Lahirushan, K. P. K. S., & Gunasekara, W. G. V. (2015). The Impact of Government Expenditure on Economic Growth : A Study of Asian Countries. 9(9), 3152–3160. https://doi.org/10.12691/ijefm-6-1-2
Liu, J., Sirikanchanarak, D., Sriboonchitta, S., & Xie, J. (2018). Analysis of Household Consumption Behavior and Indebted Self-Selection Effects : Case Study of Thailand. 2018. https://doi.org/10.1155/2018/5486185
Minarni, M. (2021). Analisis Pemikiran Keuangan Publik Ibnu Taimiyah Vs Kebijakan Fiskal Keynesian. Jurnal Ilmiah Ekonomi Islam, 7(2), 734–747. https://doi.org/10.29040/jiei.v7i2.2406
Nickell, S. (1981). Biases in dynamic models with fixed effects. Econometrica, 49, 1417–1426. https://doi.org/10.2307/1911408
Nistor, P. (2014). FDI and economic gro owth , the case of Romania. Procedia Economics and Finance, 15(14), 577–582. https://doi.org/10.1016/S2212-5671(14)00514-0
Oseni, I. O. (2016). Exchange rate volatility and private consumption in Sub-Saharan African countries : A system-GMM dynamic panel analysis. Future Business Journal, 2(2), 103–115. https://doi.org/10.1016/j.fbj.2016.05.004
Petchko, K. (2018). Chapter 10 - Theory and Theoretical Frameworks (K. Petchko (ed.)). Academic Press. https://doi.org/10.1016/B978-0-12-813010-0.00010-7.
Prawoto, N., & Tri Basuki, A. (2020). The influence of macroeconomic variables, processing industry, and education services on economic growth in indonesia. Entrepreneurship and Sustainability Issues, 8(1), 1029–1040. https://doi.org/10.9770/jesi.2020.8.1(69)
Rasnino, C. A., Nuryadin, D., & Suharsih, S. (2022). Pengaruh Angka Harapan Hidup, Rata-rata Lama Sekolah dan Konsumsi Rumah Tangga Terhadap Pertumbuhan Ekonomi di Kabupaten/Kota Provinsi Lampung, 2014-2019. Jurnal Impresi Indonesia, 1(3), 191–200. https://doi.org/10.36418/jii.v1i3.29
Raza, A., Imran, M., Ahmed, K., Hassan, I., Eldin, M., & Ghamry, N. A. (2023). Heliyon Is Greenfield investment improving welfare : A quantitative analysis for Latin American and Caribbean developing countries. Heliyon, 9(10), e20703. https://doi.org/10.1016/j.heliyon.2023.e20703
Ridzuan, A. R., Razak, M. I., Ibrahim, Z., Halim, A., Noor, M., & Ahmed, E. M. (2014). Household Consumption , Domestic Investment , Government Expenditure and Economic Growth : New Evidence from Malaysia. 3(17), 2373–2381. https://doi.org/10.9734/JSRR/2014/11335
Shabbir, M. S. (2021). Effect of domestic and foreign private investment on economic growth of Pakistan. TRANSNATIONAL CORPORATIONS REVIEW, 13, NO. 4, 437–449. https://doi.org/10.1080/19186444.2020.1858676
Soleh, A., & Anitasari, M. (2015). Pengaruh Pengeluaran Pemerintah terhadap Pertumbuhan Ekonomi di Provindi Bengkulu. Ekombis Review, 117–127. https://doi.org/10.37676/ekombis.v3i2.139
Statistics Indonesia. (2023). PDRB Menurut Provinsi (Persen). Laju PDRB Menurut Provinsi (Persen).
Wilantari, R. N., Oktaviana, F., Santoso, E., & Yunitasari, D. (2020). Ketidakpastian Kebijakan Ekonomi China Dan Pertumbuhan Ekonomi Indonesia. BISMA: Jurnal Bisnis dan Manajemen, 14(2), 147. https://doi.org/10.19184/bisma.v14i2.17911
Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51. https://doi.org/10.1016/j.jeconom.2004.02.005
Wiranthi, P. E. (2014). Analisis Determinan Pengeluaran Konsumsi Makro Rumah Tangga Di Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 3(2), 199–212. https://doi.org/10.15408/sigf.v3i2.2063
Xie, Q. (2024). Impacts of Financial Literacy on Elderly Households’ Consumption. Finance Research Letters, 62. https://doi.org/10.1016/j.frl.2024.105146
Xuan, P., Ngoc, V., Thi, N., Thu, P., & Mai, L. (2024). Nexus of innovation , foreign direct investment , economic growth and renewable energy : New insights from 60 countries. Energy Reports, 11(May 2023), 1834–1845. https://doi.org/10.1016/j.egyr.2024.01.050
Yuni, R. (2021). Dampak Perdagangan Internasional Terhadap Pertumbuhan Ekonomi Indonesia Pada Tahun 2009-2019. Niagawan, 10(1), 62. https://doi.org/10.24114/niaga.v10i1.19193
Zainuri, Hadi, T. P., & Sri Budiartini, A. (2022). PMDN Dan Financial Inclusion Sebagai Determinan Dinamika PDRB Provinsi Jawa Timur. Journals of Economics Development Issues, 5(1), 526–538. https://doi.org/https://10.33005/jedi.v5i1.114
Published
2025-09-02
How to Cite
RAMADHAN, Gilang; YUNITASARI, Duwi; PRIYONO, Teguh Hadi.
Analysis of Indonesian Economic Growth using System Generalized Method of Moment.
Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, [S.l.], v. 20, n. 2, p. 127-138, sep. 2025.
ISSN 2620-8849.
Available at: <https://jos.unsoed.ac.id/index.php/er/article/view/13716>. Date accessed: 25 dec. 2025.
doi: https://doi.org/10.32424/er.v20i2.13716.
Section
Articles
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