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Abstract
This study aimed at explaining the relationship, and effects of human capital, entrepreneurial business opportunities, institutional economics, and regional economic growth. It was carried out to develop fundamental microeconomic model in rural development to assist human capital roles and institutions as well as entrepreneurial business for the economic growth. Further, the researchers used simultaneous system method in form of a recursive correlational path analysis model. This modeling system provides simplicity and easy understanding. The main source of the data were the empirical micro fundamental data of the business doers in rural areas measured by Gini index ratio. The findings showed that human capital and institutions were the main pillars in improving the quality of regional economic growth. Interestingly, there was a strong relationship between business opportunities and economic growth. However, the business opportunities had significantly negative effect toward the regional economic growth. These indicate the existence of a disturbance outside the model, namely the presence of bank credit which apparently made the business doers suffered losses. In this way, there is a need to examine further the reasons why the bank credits given to MSMEs negatively effect the economic growth.
Highlights
Rural development-based Micro Small Medium Enterprises (MSMEs) entrepreneurship is the main agent in encouraging new businesses in rural area
Before proceeding to the details of the findings, there is a need to know that the variable of entrepreneurial business opportunities in rural areas was defined as “entrepreneurship” at the level of village done by the communities
This could be in form of various business, such as sundries shop, household industry, agricultural business covering agribusiness, and agricultural product technology, and other businesses in form of MSMEs or even a supermicro business functioning as the main reinforcing factor for rural development
Summary
Rural development-based Micro Small Medium Enterprises (MSMEs) entrepreneurship is the main agent in encouraging new businesses in rural area. According to Prasetyo (2019c) factors of entrepreneurship productivity are the main and the first booster of regional economic growth and employment opportunities in rural area, while MSMEs entrepreneurship doers in rural area are the main doers of changes who continuously attempt to create a new environment and businesses for villagers and development improvement. Kulkarni (2018) confirms that the contribution of rural entrepreneurship development program positively effects on development of rural area. According to Kulkarni (2018), the entrepreneurship helps to create an inclusive, sustainable, and balanced growth. (2008, 2018) investigated the relation between economic growth, production factor input, human capital, entrepreneurship, economic growth, and institutions Acs. (2008, 2018) investigated the relation between economic growth, production factor input, human capital, entrepreneurship, economic growth, and institutions
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