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Original Research

THE EFFECT OF DOMESTIC INVESTMENT, FOREIGN INVESTMENT AND GOVERNMENT SPENDING ON ECONOMIC GROWTH, LABOR ABSORPTION AND COMMUNITY WELFARE IN EAST KALIMANTAN PROVINCE

ELVYANI NURI HARLAWATI GAFFAR 1, H. UJIANTO 2, and TRI ANDJARWATI 3.

Vol 18, No 03 ( 2023 )   |  DOI: 10.17605/OSF.IO/YD3E2   |   Author Affiliation: Faculty of Economics and Business Universitas 17 Agustus 1945 Surabaya East Java Indonesia 1,2,3.   |   Licensing: CC 4.0   |   Pg no: 1626-1638   |   Published on: 30-03-2023

Abstract

The purpose of this study was to analyze the effect of domestic investment, foreign investment and government spending on economic growth, employment and social welfare in East Kalimantan Province. The design of this study uses an approach to exploratory research and using a quantitative approach method. The data used is in the form of data time series (2020-2021) and cross section. The sample of this research is 9 districts/cities in East Kalimantan Province. The data analysis technique used is panel data regression analysis which is run using the help of Eviews 9 software. This study has three equations and chooses the best model, namely REM and CEM by carrying out the Chow test, Hausman test and LM test. In the regression equation 1 (economic growth equation)), the best model is REM. The result is that domestic investment, foreign investment and government spending simultaneously have no significant effect on economic growth. In the regression equation 2 (employment absorption equation), the best model is REM. The result is that domestic investment, foreign investment, government spending and economic growth simultaneously have no significant effect on employment. In the regression equation 3 (public welfare equation), the best models are REM and CEM, the results are domestic investment, foreign investment, government spending, economic growth and employment simultaneously have a significant effect on people's welfare in East Kalimantan Province. Novelty in this research is the development of a conceptual model by producing 3 equations and adding 3 indicators to strengthen novelty.The results of this study are expected to be used as a reference by further researchers and can be used as reference material in subsequent studies. Suggestions for the regional government of East Kalimantan Province and stakeholder in order to implement inclusive economic development, Green Economy, Blue Economy andEconomy Optimally creative with concepts pentahelix to increase and distribute the welfare of the community to achieve the goal of sustainable development in order to increase and distribute the welfare of the community throughout the Province of East Kalimantan.


Keywords

Domestic investment, government spending, economic growth, employment and people's welfare