Abstract
This paper aims to analyze the impact of infrastructure spending on economic growth in Indonesia, which includes investment in road, port and irrigation infrastructure. The period of observation was 2011-2018, which covered 29 provinces with consideration of data availability. This study employed the growth model with a panel data analysis, which analyze the relationship between the economic growth and government investment in infrastructure in the long run. The most essential finding in this study is that the economic growth is positively influenced by government investment in road, port and irrigation infrastructure. Road infrastructure investment has a significant positive impact and the effect occurs in the fourth year after infrastructure development. In comparison, port and irrigation infrastructure investment have a positive but not significant impact to other variables.
Highlights
Current development, including infrastructure development, will determine the future civilization
The results show that the quantity and quality of highways have a positive impact on economic growth
The results of this study indicate that government investment in the port infrastructure has a positive impact on economic growth, but not a significant one
Summary
Current development, including infrastructure development, will determine the future civilization. Infrastructure development will create more robust connectivity more evenly throughout the country. The impact of infrastructure development on economy cannot be enjoyed directly. It takes at least a short amount of time to feel the effect. The study of measuring the performance of public infrastructure development on new economic growth was carried out around the 1990s [1]. The study of relationship between the infrastructure development and economic growth was carried out in the period 1990-1995 [2]. According to [3], infrastructure measurement from the expenditure side is considered as the leading cause of conflicting research results compared to the size in terms of performance, which is due to various reasons. Ignoring the contribution of infrastructure spending by the private sector and secondly, there are inconsistencies in infrastructure funding
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