Abstract
The Indonesian government policy in encouraging sustainable economic growth to reduce unemployment, poverty and inequality is threatened to fail, because economic growth does not reach targets and is not of quality. The purpose of this research is to explain the four pillars of growth and development namely; human capital, social capital, institutional economics and entrepreneurship as the main drivers of quality and sustainable economic growth. This research method used primary data on entrepreneurship and SMEs in the provinces of Central Java and Yogyakarta. The correlational form of recursive model path analysis was used as analytical method. The research results show the very strong role of human capital as the main key in driving economic growth both directly and indirectly. The existence of human capital and social capital will further encourage new economic institutions, furthermore new economic institutions will encourage the competitiveness of productive entrepreneurship and high, quality, and sustainable regional economic growth. The policy implication is that high, quality, and fundamentally sustainable economic growth must be built on the four main pillars basis namely; human capital, social capital, institutional and entrepreneurship in order to be more successful in reducing development problems; unemployment, poverty and income inequality.
Highlights
Indonesia's economic growth is largely supported by foreign investment and inappropriate consumption sector, resulting in low, unqualified and high cost economic growth
The argument, because based on the coefficients reflected in Table-2, it is known that the Rmultiple value is above 80%, and the average R-square value is greater than 70%, and the R-square adjusted value is close to the R-square value, the model is declared good, strong and credible
We conclude; firstly, there is a very strong correlation and positive and significant influence between human capital and quality economic growth, so it can be concluded that human capital is the main and first key in encouraging quality, high and sustainable economic growth
Summary
Indonesia's economic growth is largely supported by foreign investment and inappropriate consumption sector, resulting in low, unqualified and high cost economic growth. Quality economic growth is determined by technological factors and the accumulation of human capital as the main determinant in the industry and the economy as a whole (Prasetyo, 2008; Ganeva, 2010 Acemoglu, 2014). The human capital factor has long been believed to be positively associated with quality and sustainable economic growth. While empirically, this said relationship does not always hold for several reasons (Afzal, 2010; Pelinescu, 2015). For example the human capital factor is only measured by the level of education which is not representative to measure the dimensions of human capital
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