Abstract
This study to investigation effect of hinterland government expenditure each region, Gross Regional Domestic Product (GRDP), investment, consumer price index, and the road length of South Sumatera province toward the GRDP of other provinces in Southern Sumatera such as Jambi, Lampung, Bengkulu, and Bangka-Belitung Island. The data use secondary data during 1986-2015, data source from the Central Bureau of Statistics, Directorate General of Regional Fiscal Balance, and Indonesia Investment Coordinating Board. The analysis uses multiple regressions with Ordinary Least Square (OLS) method. The results showed that the economic spillover of South Sumatera consisting of gross domestic product, investment, consumer price index and the road length caused spread effects to Jambi, Lampung, Bengkulu, and Bangka Belitung with positive values except for Bangka Belitung whose consumer price index was negative.
Highlights
Development basically is a multidimensional process that involves changes in social structure, attitudes of society and national institutions
One of the most indicators commonly used to find out the economic condition of a region was the Gross Regional Domestic Product (GRDP)
Within 30 years, the value of GRDP in South Sumatera increased very significantly; the highest increase of GRDP was achieved by South Sumatera province
Summary
Development basically is a multidimensional process that involves changes in social structure, attitudes of society and national institutions. It includes changes in the rate of economic growth, reduction in income inequality, and poverty eradication (Sinding, 2009). It was illustrated that the impact of the Growth Center strategy differed across the hierarchy suggesting that the expected trickle-down effect around the growth center did not occur evenly. A study conducted by Basile, Capello & Caragliu (2011) the results showed that the effect of geographic and relational proximity on knowledge spillovers strengthened one another; the data clearly showed that the immediate area in terms of spatial to exchange knowledge was easier when having the same level of confidence
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