Zulaekha Setiyani, Jihad Lukis Panjawa, Jalu Aji Prakoso, Yustirania Septiani

Impacts of Capital Formation, Labor, Human Development, and Tourism on Economic Growth in Yogyakarta Province

Introduction

Impacts of capital formation, labor, human development, and tourism on economic growth in yogyakarta province. Study capital formation, human development, and tourism's impact on Yogyakarta's economic growth (2011-2024). FEM reveals GFCF, HDI, tourism are key drivers, informing regional development policies.

Abstract

Objective: This study investigates the determinants of regional economic growth in the Special Region of Yogyakarta, focusing on five districts and cities during the period 2011–2024. The research addresses the problem of persistent interdistrict disparities despite Yogyakarta’s consistently higher economic growth than the national average. The main objective is to identify the key factors influencing regional growth and to assess their relative contributions within a tourism-driven economy. This empirical research is relevant to the broader macroeconomic context of regional development and income distribution. Methods: An empirical analysis using static panel data regression with a Fixed Effect Model (FEM) is employed. The dataset covers annual observations from 2011 to 2024 for five administrative areas. Variables include Gross Fixed Capital Formation (GFCF), the Human Development Index (HDI), labor force participation, and tourism income. The FEM method effectively controls for regional and temporal heterogeneity, yielding robust estimates of growth determinants. Findings: Empirical results reveal that GFCF, HDI, and tourism income have significant, positive effects on regional economic growth, underscoring the importance of investment, human capital, and tourism as primary drivers of growth. Conversely, the labor force variable shows no statistically significant impact. These findings underscore the distinct structure of Yogyakarta’s economy, where capital formation and tourism-based income play a more dominant role than labor quantity in driving growth. Originality/Value: This study enriches existing literature by reassessing growth determinants using updated data and emphasizing Yogyakarta’s tourism-based regional economy. It fills gaps in prior studies marked by mixed findings and limited tourism-focused analyses, offering new empirical insights into the tourism growth nexus at the subnational level. Policy Implication: Findings suggest that local governments should strengthen investment, human capital, and tourism development to achieve inclusive and sustainable growth. Policy efforts focusing on infrastructure, education, and tourism promotion are essential to reducing interdistrict disparities and fostering balanced regional development.

Review

This study offers a valuable and timely analysis of the determinants of economic growth within the Special Region of Yogyakarta, focusing on its five constituent districts and cities over the period 2011-2024. Employing a robust Fixed Effect Model (FEM) on panel data, the research effectively controls for unobserved heterogeneity, providing reliable estimates of growth drivers in a significant regional economy. The empirical findings clearly highlight Gross Fixed Capital Formation (GFCF), the Human Development Index (HDI), and tourism income as significant positive drivers of regional economic growth, underscoring their critical roles in Yogyakarta’s development. A key finding is the non-significant impact of the labor force variable, suggesting a distinct economic structure where capital and tourism-based income are more dominant than labor quantity in driving growth. This study notably enriches existing literature by utilizing updated data and emphasizing a tourism-centric subnational economy, addressing prior gaps and mixed findings. While the study's methodological approach is sound for controlling regional and temporal specificities, further discussion on certain aspects could enhance its depth. The finding regarding the insignificance of the labor force variable, for instance, merits more comprehensive interpretation. It raises questions about whether this reflects a highly skilled or less labor-intensive nature of the local tourism economy, or perhaps the inadequacy of a simple labor force quantity measure to capture the nuanced contributions of human resources to a modern service-driven economy. Additionally, although the abstract states the research addresses persistent interdistrict disparities, the findings primarily identify general growth drivers. A more explicit analysis of how these identified factors contribute differentially across districts, or how strengthening them uniformly might specifically reduce existing disparities, would further reinforce the actionable nature of the policy implications regarding balanced regional development. In conclusion, this research provides compelling evidence and actionable insights for policymakers in Yogyakarta and other regions facing similar development challenges, particularly those with a strong tourism reliance. The identified policy implications, advocating for strengthened investment, human capital development, and targeted tourism promotion, are well-supported by the empirical findings. To build upon this important work, future research could delve deeper into the specific quality aspects of the labor force relevant to a tourism economy, explore the dynamic interactions between GFCF, HDI, and tourism, or utilize spatial econometric techniques to more directly model and address the dynamics of interdistrict disparities. This would offer an even more granular understanding necessary for fostering inclusive and sustainable regional growth.

Full Text

Comments

You need to be logged in to post a comment.