Assessing social and economic determinants of regional economic growth in East Java of Indonesia

Hadi Sumarsono, Bagus S. Narmaditya, Farida Rahmawati, Sugeng H. Utomo, Putra H. Prayitno, Andi Pratama

Abstract


Relevance. This study examines how socioeconomic factors such as poverty, capital expenditure, and human development shape economic growth in East Java, Indonesia. Understanding these relationships is important because they help explain how key development variables interact to influence regional economic performance. As one of Indonesia’s most populous and economically diverse provinces, East Java provides a critical context for analyzing the role of government intervention and development disparities in shaping economic outcomes.

Research objective. This study investigates the relationship between the Human Development Index (HDI), poverty, General Allocation Fund (GAF), capital expenditure, and regional economic growth in East Java, Indonesia.

Data and methods. A fixed effects panel data regression model is employed using data from districts/cities in East Java over the period 2018–2023. The data are obtained from Statistics Indonesia (BPS) and the Directorate General of Fiscal Balance, Ministry of Finance.

Results. The findings indicate that HDI and capital expenditure have a positive effect on regional economic growth in East Java, while poverty has a negative effect. In contrast, GAF is found to have no significant impact on economic growth. The novelty of this study lies in its subnational panel approach, which captures regional heterogeneity in growth determinants that is often masked in national-level analyses.

Conclusions. The results provide relevant implications for both theory and policy in regional economic development, particularly regarding the limited effectiveness of GAF in promoting economic growth in East Java.


Keywords


capital expenditure, economic growth, economic development, general allocation fund, government intervention, human development index, poverty, regional economy

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References


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DOI: https://doi.org/10.15826/recon.2026.12.2.014

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