DETERMINANTS OF ECONOMIC GROWTH IN CENTRAL JAVA: INVESTMENT, LABOR FORCE, FISCAL INDEPENDENCE, AND HUMAN DEVELOPMENT

Abstract

In Central Java Province, economic growth between 2021 and 2023 remained the lowest among Java Island’s provinces, despite being influenced by internal factors such as investment, labor force, fiscal autonomy, and the Human Development Index (HDI). This study investigates the effect of these variables on economic growth across 35 districts and cities using a panel data regression approach. Data were sourced from the Central Statistics Agency and the Directorate General of Treasury, and analyzed using the Fixed Effect Model (FEM) in EViews 10. The results indicate that investment has no significant impact, while the labor force and fiscal autonomy ratio both negatively and significantly affect growth. In contrast, HDI has a positive and significant effect. These findings suggest the need for improved investment climate, better workforce quality through education and training, efficient fiscal management, and prioritization of human development to support sustainable regional growth.