PERTUMBUHAN EKONOMI REGIONAL DAN FAKTOR-FAKTOR YANG MEMPENGARUHINYA (STUDI KASUS PROVINSI

Abstract

ABSTRACT Economic growth is essential in reducing poverty and creating employment. Structural transformation that occurred in Central Java enhances economic growth significantly. Economic growth rises from 4,90 percent in 2004 to S, 90 percent in 2007, but this growth is relatively low among anotherprovinces in Central Java andfollowed by interregion inequality. This case is fundamental in formulating interregional policy and its solution must be found. Further research is needed to examinefactors that determine economic growth in order to enhance economic growth. This study aims to examine the impact of agglomeration, investment, labor, and inequality in economic growth of Central Java from 2003 to 2006 Model in this study is based on Solow Neoclassical growth model which are capital and labor factor. Method used in this study is data panel withfixed effect model approach. To catch economic growth variation among regions that apply regional management such as Barlingmascakeb, Subosukawonosraten, anyl other regions outside Barlingmascakeb, and Subosukawonosraten, this study uses dummy areas. The econometric analyses shows that agglomeration and labor have significant relationship with economic growth. Lower in economic growth of Central Java is caused by the decrease of agricultural sector (as the largest sector which absorbs labor) productivity and lower human resource quality. This findings is caused by the lower ofgrowth in agricultural technology. There also disguised employment in agricultural, service, and industry sector that makes economic growth in Central Java is relatively low. Keywords: Economic Growth, Agglomeration, Investment, Labor, Inequality.