PANEL DATA ANALYSIS OF FACTORS AFFECTING ECONOMIC GROWTH IN INDONESIA
Keywords:
Economic growth, panel data regression, fixed effect model, exports, minimum wage, IndonesiaAbstract
Economic growth is widely regarded as a key indicator of a country’s overall development. This study investigates the factors influencing economic growth in Indonesia during the 2020–2024 period, where growth is proxied by Gross Regional Domestic Product (GRDP) at constant 2010 prices. The analysis employs panel data regression by incorporating several explanatory variables, including the open unemployment rate, poverty rate, Human Development Index, labor force participation rate, exports, investment, minimum wage, and population growth. Model selection was conducted using the Chow test and the Hausman test, both of which indicated that the Fixed Effect Model (FEM) is the most appropriate estimation method. The results of the partial (t-test) reveal that exports and the minimum wage have a statistically significant effect on economic growth, while the remaining variables do not show significant effects. The coefficient of determination (R²) reaches 59.87 percent, indicating that the independent variables collectively explain a substantial portion of the variation in economic growth. Furthermore, the adjusted R² value of 49.39 percent suggests that the model has a reasonably strong explanatory power. Overall, the findings emphasize the importance of strengthening export performance and implementing effective minimum wage policies to support economic growth in Indonesia.
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