THE EFFECT OF CAPITAL EXPENDITURE AND HDI INTERACTION ON DOMESTIC INVESTMENT IN REGENCY/CITY IN CENTRAL JAVA

Abstract

Domestic investment across regencies and cities in Central Java continues to exhibit significant disparities and fluctuations. This study aims to analyze the effect of capital expenditure on roads, irrigation, and networks, as well as capital expenditure on buildings and structures, with the Human Development Index (HDI) as a moderating variable, on domestic investment in Central Java Province. This study used secondary data from 35 regencies/cities in Central Java Province for the period 2016-2024. The research method employed panel data regression using the Moderated Regression Analysis (MRA) technique. The results showed that: (1) capital expenditure on roads, irrigation, and networks had no significant effect on domestic investment in regencies/cities in Central Java; (2) capital expenditure on buildings and structures had no significant effect on domestic investment in regencies/cities in Central Java; (3) the HDI had a significant effect on domestic investment in regencies/cities in Central Java; (4) the HDI was not able to strengthen the effect of capital expenditure on roads, irrigation, and networks on domestic investment in regencies/cities in Central Java; (5) the HDI was able to strengthen the effect of capital expenditure on buildings and structures on domestic investment in regencies/cities in Central Java.