Abstract
This research aims to analyze the effect of openness on the economic growth of provinces in Indonesia. Using panel data from 2010 to 2017 in six provinces in Indonesia with investment and labor control variables, the results show that trade openness has an essential contribution to improving economic growth in Indonesia's provinces. The methodology of this study is use regression panel model. These results are following the concepts of theory and empiricism. However, because the degree of openness of provincial trade in Indonesia is still relatively low, the positive influence contributing to the domestic economy is also relatively low, from the control of foreign investment, FDI, and labor, which has a negative effect
Highlights
Economic relations between countries include exchanges of output, labor, capital, and technology from each country
Whereas in Simorangkir's (2006) study, which conducted a study on trade openness to economic growth in Indonesia in the 1980-2005 period, the results showed that trade openness variables had a negative influence on economic growth
The solution is to use the white method, namely by changing the coef. covariance method in the options panel to become a white cross-section so that the regression equation becomes a regression equation that is free from autocorrelation problems
Summary
Economic relations between countries include exchanges of output, labor, capital, and technology from each country. Many countries make economic cooperation relations with other countries through international trade, called the open economy (trade openness). Countries with open economies are countries that carry out export-import activities of goods or services and borrow or provide investment loans through world capital markets. Economic openness illustrates the reduced barriers to conducting trade between countries and the higher share of trade, benefiting all countries involved. An open economy can improve economic efficiency and competitiveness
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