The Effect of Incremental Capital Output Ratio (ICOR), Labor Force Participation Rate (TPAK) and Index Human Development (IPM) Against Economic Growth in Indonesia

Abstract

The purpose of this study was to examine and analyze the influence of Incramental Capital Output Ratio (ICOR),Labor Force Participation Rate (TPAK), and Human Development Index (IPM) on Economic Growth at 33 provinces in Indonesia during the 2011-2022 period. The research used Panel Data regression, after carrying out the Chow test and Hausman test and Langrange Multiplier test, the estimation used was the Random Effect Model (REM). The results of testing the model with ÿ=5 percent show that ICOR and the Human Development Index have a significant positive effect on Economic Growth in Indonesia, while the Labor Force Participation Rate has no effect on Economic Growth in Indonesia. Therefore, the Indonesian government should be able to make policies that are able to encourage increased investment that needs to be realized and developed so that the capital stock can be optimally utilized to accelerate economic growth. The government should also encourage formal education to increase technical capabilities for more skilled workers so that they can adapt to the required competency needs. Then the Indonesian governmentcan also make policies that are able to encourage the welfare and quality of society to encourage economic growth such as equal distribution of education and health services for all people, in addition to increasing social insurance for all people.