Research Article
Inclusive Economic Development Determinants in Indonesia: Comparing Governance and non-Governance Factors
@INPROCEEDINGS{10.4108/eai.21-9-2023.2345686, author={Rian Hilmawan and Bramantyo Adi Nugroho and Nurjanana Nurjanana and Fitriansyah Fitriansyah}, title={Inclusive Economic Development Determinants in Indonesia: Comparing Governance and non-Governance Factors}, proceedings={Proceedings of the 2nd International Conference on Contemporary Risk Studies, ICONIC-RS 2023, 21-22 September 2023, Bali, Indonesia}, publisher={EAI}, proceedings_a={ICONIC-RS}, year={2024}, month={6}, keywords={inclusive development governance fiscal autonomy province indonesia}, doi={10.4108/eai.21-9-2023.2345686} }- Rian Hilmawan
Bramantyo Adi Nugroho
Nurjanana Nurjanana
Fitriansyah Fitriansyah
Year: 2024
Inclusive Economic Development Determinants in Indonesia: Comparing Governance and non-Governance Factors
ICONIC-RS
EAI
DOI: 10.4108/eai.21-9-2023.2345686
Abstract
This study investigates governance and non-governance variables impact on inclusive economic development (IDE) over provinces in Indonesia. We examine whether the fiscal autonomy index (revealing the ability of local governments (at the district levels, averaged) in “generating” local-owned source revenue (or Pendapatan Asli Daerah (PAD)) plays a vital role compared to those non-governance aspects. We use 30 provinces during the 2012-2021 period and employ the Fixed Effect (FE) and Random Effect (RE) estimators, along with the FE approach with lags for all independent variables. Our findings support the hypothesis that the governance's effect strongly contributes to inclusive development. For robustness check, we retest our model using both panel-corrected standard error (PCSE) and the Driscoll and Kraay methods to deal with cross-sectional dependence. The estimates obtained using these two latter approaches complement FE and RE results. We conclude inclusive development in the province is sensitive to improvement in local governance.