How to cite:

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence. (2021).

Analysis Of The Effect Of Increasing The Gdp Of Central Java Province

Through Infrastructure Development. Jurnal Eduvest. 1(6): 409-415

E-ISSN:

2775-3727

Published by:

https://greenvest.co.id/

Eduvest – Journal of Universal Studies

Volume 1 Number 6, June 2021

p- ISSN 2775-3735- e-ISSN 2775-3727

ANALYSIS OF THE EFFECT OF INCREASING THE GDP OF CENTRAL JAVA

PROVINCE THROUGH INFRASTRUCTURE DEVELOPMENT

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence

Batam International University

E-mail: [email protected], 1941039.jerly@uib.edu,

[email protected], [email protected]

ARTICLE INFO ABSTRACT

Received:

May, 25

2021

Revised:

June, 3

2021

Approved:

June, 14

2021

Infrastructure can be said to be the main driver for the

growth of economic activity in every country in the world,

therefore the importance of infrastructure cannot be

underestimated. However, infrastructure development for

Central Java is considered to be still in its early stages and

as such, inadequate infrastructure could seriously hamper

the economy. This study aims to investigate the effect that

an increase in GDP has on infrastructure growth through

data collected from various sources. The methodology

used to analyze and review the information generated by

the data is a quantitative method. The data used is

secondary data on infrastructure in 35 districts in Central

Java from 2010 to 2020. The analytical tool used in this

study is panel data regression using the fixed effect

method. Indicators to determine the progress of the

national economy can be seen from the values seen in

various GRDP in Indonesia. The results of this study

conclude that the COVID-19 pandemic has affected several

things, one of which is the country's economic growth.

Planned infrastructure development can bring growth to

the economy of a region as in the example shown above.

Infrastructure development is one of the supporting

factors to increase economic growth in a region. The

development can be in the form of the establishment of

hospitals, transportation facilities, public schools and

other.

KEYWORDS

GDP, Infrastructure , Economic, Production

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence

Analysis of the effect of increasing the gdp of central java province through

infrastructure development 410

This work is licensed under a Creative Commons

Attribution-ShareAlike 4.0 International

INTRODUCTION

Economic growth is seen as the most important part of economic policy in any

country or economic system (Muttaqin, 2018). The endogenous growth model, which was

an improvement on the Harrod– Domar and Solow growth models, explains that

investment in human capital, innovation and knowledge would unquestionably contribute

to economic growth (Ogundipe, Mobolaji, & Ogundipe, 2021). Beside, Countries with

higher rates of savings have had a faster economic growth than those with lower saving

rates (Ribaj & Mexhuani, 2021). Many analysts believe that economic growth in a high-

income country tends to be slower every year to come in the next period and partly that is

the development of this country's population which is expected to decline significantly

(Baker, De Long, & Krugman, 2005).

Gross Domestic Product (GDP) can be interpreted as the total amount of

production produced by the government (Arif, 2014). Gross Domestic Product is a

production of the value of goods and services originating from within a country in a

certain period. The calculation of national income is also a concept in gross domestic

product. According to (Tatan Sukwika, 2018) Gross Regional Domestic Product (GRDP)

is a very important indicator and is used to determine the economic condition of an area

in a period, whether it is based on prevailing prices or on the basis of constant prices. The

influence of Regional Domestic Product (GRDP) in a related area will always follow a

certain pattern based on the results of a selective study when faced with certain situations

and conditions, so that equitable development needs to be carried out thoroughly if the

targets set before the development are to be achieved.

GRDP has an unfavorable influence on the development of the unemployment

rate, thus causing the unemployment rate to decrease if the regional GRDP increases and

vice versa. This explanation agrees with the notion (Laksamana, 2016) where GRDP has

a large and negative effect when faced with unemployment growth in Central Java.

Infrastructure development within the country has become an important aspect in

the process of accelerating the level of national and regional development. Infrastructure

has a role to be the driving wheel of economic growth (Andiyan & Rachmat, 2021).

GRDP (Gross Regional Domestic Product) is one of the most important indicators in

knowing the condition or economic growth of a region from within the level of one

period. GRDP can be interpreted as the sum of all income earned from each business unit

of economic activity in an area (Wahyuningtyas, Rusgiyono, & Wilandari, 2013). This

GRDP can be used as a source of information in planning, designing or developing in the

economic field.

Infrastructure can be mentioned as one of the drivers of a country's economic

growth. The source comes from an allocation of public and private financing. According

to (Gie, 2002) in (Hawali & Aritenang, n.d.) in macroeconomic theory, the availability of

infrastructure services is an influence on reducing production costs and of course also

affects the marginal productivity of private capital. Infrastructure is an important

influence for improving the welfare of human life (Atmaja & Mahalli, 2015). One

example is an increase in the value of consumption, production capacity of the workforce

and as an entry point to employment (Sulaksono, 2015). According (Mankiw, 2003)

argues that infrastructure is a physical system that provides facilities in the form of

drainage, bridges and others as a form of government investment in its citizens to

encourage economic development. Infrastructure is also built to advance a company's

How to cite:

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence. (2021).

Analysis Of The Effect Of Increasing The Gdp Of Central Java Province

Through Infrastructure Development. Jurnal Eduvest. 1(6): 409-415

E-ISSN:

2775-3727

Published by:

https://greenvest.co.id/

productivity level in the form of an increase from a company so that it can become even

better (Hapsari, 2011).

Eduvest – Journal of Universal Studies

Volume 1 Number 6, June 2021

411 http://eduvest.greenvest.co.id

This research was conducted in order to determine the effect of infrastructure

development on economic growth conditions in Central Java Province. The analysis was

compiled based on the results of economic data in the province of Central Java from

2010-2020. By using quantitative analysis methods, the authors can determine the rate of

economic growth that occurs in an area that is difficult to separate from the infrastructure

in the country such as transportation, telecommunications, sanitation, and energy. These

factors can cause infrastructure development within the country to be the basis of

sustainable economic development.

Based on data from the Central Java Statistics Agency (BPS Jateng) it has been

noted that the effects of infrastructure development in Central Java are developing from

year to year. Infrastructure plays an important role in increasing the value of state

consumption, access to employment, increasing labor productivity, increasing prosperity

in the country's economy and realizing macroeconomic stability.

Gross Regional Domestic Product in Central Java province has increased from

2010 to 2019. However, based on data from BPS it is known that in 2020 there will be a

decline due to the COVID-19 pandemic. This epidemic has caused national income in

Central Java to decline, many economic activities have slowed (Indayani & Hartono,

2020), one of which is infrastructure development the regional and state economies

experienced a slump that year.

The province of Central Java is experiencing rapid development of infrastructure,

because Central Java has a high population and there are many companies that are

established in the area. In this case, the movement of infrastructure greatly affects the

GDP in the country. Therefore, research to examine more deeply the impact of

infrastructure development on GRDP is very important in order to increase the pace of

the economy of Central Java province.

Previously, there have been previous studies that are relevant to this study, one of

the studies conducted by (Zamzami & PUJIYONO, 2014) with the title Analysis of the

Effect of Infrastructure on the GDP of Central Java in 2008 – 2012. The results of This

study indicates that the length of road, irrigation, the rate of education (Senior High

School), public civil servants, and the development expenditure, have affect significantly

to regional GDP of Central Java. Meanwhile, water, electricity, the rate of health (amount

of bedroom in hospital) and housing positively affect regional GDP but not significant.

Semarang city and Surakarta city have good regional GDP because their coefficients are

positive, meanwhile the other cities are negative. The result of this study also founded the

irrigation has the biggest impact.

RESEARCH METHODS

During the research process, the author's team used quantitative research to carry

out this analysis. The approach used in this research is descriptive research. This research

was conducted by collecting descriptive data about a social phenomenon. The author uses

quantitative data in conducting the research process. Quantitative data is one type of data

that depends on numbers and numbers. The data source used by the author is primarily

from the BPS (Central Statistic Agency) website which contains data needed by the

authors to determined the development of GRDP in Central Java, mainly on Batam from

the year 2010 to 2020, with the secondary source being namely through various literature

studies, news and several journals which contains references the author feel correlates

with the topic. The population referred to in the study This is the entire area in the district

and city consisting of 29 districts, 6 municipal areas and 576 sub-districts. The sample is

Eduvest – Journal of Universal Studies

Volume 1 Number 6, June 2021

How to cite:

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence. (2021).

Analysis Of The Effect Of Increasing The Gdp Of Central Java Province

Through Infrastructure Development. 1(6): hlm

E-ISSN:

2775-3727

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part of the population. Here the author uses a sample of the area and population to

conduct this research.

RESULTS AND DISCUSSION

Infrastructure development in an area is an activity that has been planned and

carried out as a form of effort to achieve change towards a better condition compared to

the situation before the development took place. Therefore, many want development in

their respective areas so that the quality of life and welfare of the people in their area

experience a more positive change, the intended infrastructure can include several

projects such as train stations, bridge construction, construction of hospitals and public

schools, transportation facilities and others. The things mentioned earlier can be called a

form of supporting factors that encourage the growth of an economy in a region or

country.

So as the object of research, the research team uses data regarding the Gross

Domestic Regional Product of the province of Central Java as a measuring tool and as the

basis for the results of this group's research in analyzing the impact of infrastructure

development that can directly affect the economic growth of a region, especially in the

Central Java area.

Picture 1. GDP of Central Java. Source: https://jateng.bps.go.id/

Based on the table above, the GRDP of Central Java province experiences constant

economic growth (except in 2020 where the GRDP of Central Java has decreased due to

COVID-19) every year, this is believed to have occurred due to the sustainable

infrastructure development experienced by the region. For example, the construction of

the Semarang-Solo toll road that connects the city of Semarang with the city of Surakarta

and passes through five other districts has a very positive influence on the activity and

productivity of the agricultural and industrial sectors of each region connected to this toll

road by providing easy access between producers and distributors. and producers with

supply chains, thereby facilitating regional economic growth and Gross Regional

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence

Analysis of the effect of increasing the gdp of central java province through

infrastructure development 412

Domestic Revenue in the Central Java region since the completion of the Semarang-Solo

toll road construction project on November 11, 2011.

Eduvest – Journal of Universal Studies

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413 http://eduvest.greenvest.co.id

So from the example mentioned above, it can be concluded that infrastructure

development has a very prominent impact on the economy of a region and also on a

country when we pay attention to Gross Domestic Product, with this the welfare of the

community also increases thanks to the ease of access provided by the completion of the

bridge.

Picture 2 GRDP of the Central Java

Sumber: https://jateng.bps.go.id/

As the table above shows, the GRDP of the Central Java region in the processing

industry will experience rapid growth over the next 10 years. The team of authors believe

that this rapid growth is due to the completion of the construction of the Semarang-Solo

toll road which not only facilitates social mobility but also connects industry with the

natural resources, human resources and supply chains needed to operate their processing

activities more efficiently and optimally.

Picture 3 The average growth rate of GRDP of districts and cities in Central Java

The results of the analysis obtained from the author's team on the average growth

rate of GRDP in districts and cities in Central Java can be seen from table 1.3 which

concludes that there is a large increase in each part of the district and city such as

Jeffri Winardy, Jerly Engelina, Desy Rinika and Arvin Clarence

Analysis of the effect of increasing the gdp of central java province through

infrastructure development 414

Rembang which is the first position in Central Java with 6.9% and followed by Semarang

City and Purbalingga City with the second position with a percentage of 6.3%. In

addition, in the third and subsequent positions only get a percentage of 6.0%-3.3%. It is

an obligation of the government to carry out comprehensive infrastructure in the districts

and cities in Central Java in order to consider the economy and development of the

infrastructure sector in Central Java which is part of Indonesia.

CONCLUSION

Based on the analysis above, it can be concluded that Batam City has a fairly good

GRDP every year in the 2010-2019 period and has decreased in 2020 due to the Covid-19

virus. The results of the GRDP of the City of Batam each year are quite influential on the

economy of the city of Batam, this can be seen from the growth rate of GRDP each year,

although the average is below 5%, it can bring significant changes to the profits of the

City of Batam. Which in turn may also bring significant changes towards the rate at

which the city is developing its infrastructure and facilities which can improve the quality

of life for the citizens living in the area. Those facilities being public schools, hospitals,

interconnecting roads allowing the people to easily access the previously mentioned

facilities and their workplace, which would then improve their productivity and increase

the GRDP of Batam, causing the cycle to repeat again.

In conclusion, the economic growth of a city largely depends on how developed its

infrastructure are.he authors provide author recommendations related to this analysis,

namely during this covid-19 pandemic, hopefully the government can improve further

improvements to the economy of Batam City which was affected by the pandemic.

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