Abstract

The defense-security expenditure structure is focused on the contribution/share of the three components of defense-security expenditure, namely: routine expenditure, goods expenditure, and capital expenditure. Defense-security expenditure is total defense expenditure for the Ministry of Defense (Ministry of Defense and TNI) and security expenditure for the National Police. In conditions of security stability, strategic industrial growth, and macroeconomic stability that have not been established; it is not yet known what kind of transformation strategy of the defense-security expenditure structure is needed to encourage sustainable economic growth and decrease income inequality as a potential threat to national defense and security. This research uses explanatory method that aims to explain causal relationship and test hypothesis (hypothesis testing study). Secondary data in the study are time-series data semesterly in period of year 2000-2018. The research model was formulated as a recursive linear model in the form of Cobb-Douglas production function and analyzed using multiple linear regression analysis with Ordinary Least Square method. The research findings are The security stability and strategic industrial growth simultaneously influence the macroeconomic stability.

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