This study aims to analyze the determinants of foreign direct investment (FDI) in the Organization of Islamic Cooperation (OIC) country members for the period 2005 to 2018 The determinant variables of FDI are corruption, political stability and macroeconomic variables such as inflation, exchange rates, economic growth, and trade openness. Analysis used in the study is the fixed effect model (FEM) of the OIC data panel.The results showed that economic growth and trade openness had a significant influence on foreign direct investment (FDI), while the effects of corruption, political stability, inflation and the exchange rate have no significant effect on foreign direct investment (FDI).
ABSTRACTThe relationship between government expenditures and economic growth is an ambiguous relationship. The results of previous empirical studies indicate that the relationship between the two variables can be a positive or negative relationship. The purpose of this study is to investigate a more detailed relationship between economic growth and government expenditures. The detailed information between these two variables is obtained by investigating the direction of the relations in three levels, i.e. in various countries, in Indonesia, and in provinces in Indonesia. Furthermore, this research also investigates the variables which can drive the economic growth in those three groups of estimations. This research is conducted by using fixed effects panel data method for 96 countries and 33 provinces in Indonesia. The countries' data are estimated for the period of 1991–2014, while the provinces in Indonesia data are estimated for the period 2011–2013. Based on the results, it can be concluded that the relationship between government expenditures and economic growth depends on many factors. Moreover, the results also show variations in the relations between the two observed variables in the three groups of estimations.Keywords: economic growth; government expenditures; panel data; fixed effects model
While many developing countries have devolved public responsibilities to local governments in recent years, some studies have examined whether decentralizationactually leads to greater public sector allocation efficiency. This paper approaches this question by assessing the efficiency of government expenditure on public sector underfiscal decentralization. The area of public expenditure is of great importance making the findings have strong implications with regard to public sector efficiency.We compute public sector performance (PSP) and public sector efficiency (PSE) indicators, comprising of composite and 9 sub indicators, for 33 provinces in Indonesia.The first 6 sub indicators are opportunity indicators that take into account education, health outcomes, poverty, gender equality, quality of public infrastructure (transportationand energy). 3 order indicators reflect the standard musgravian tasks for the government: allocation, distribution, and stabilization. The input and output efficiency of public sectors across provinces is then measured using a non-parametric production frontier technique.Free Disposable Hull (FDH) analysis is used to estimate the extent of slack in government expenditures. The study finds significant differences in PSP and PSE, which suggests alarge potential for expenditure savings in many provinces. All these findings suggest diminishing marginal products of higher public spending.We also estimate a semi parametric model of the public sector production process by regressing FDH analysis output scores on non discretionary variables using the Tobit procedure. We show that inefficiency is strongly related to GDP per capita, human development index, and degree of fiscal dependence. The central message of this paper is that increasing budgetary allocations for public sector may not be the only or most effective way to increase public sector outcome, and that more attention should be given to increasing the efficiency of expenditure.Keywords: fiscal decentralization public sector performance, public sector efficiency, free disposable hull, Tobit
Abstract. This research investigates the effect of constructive social capital such as religious tolerance, political participation, and marriage; and destructive social capital such as the corruption culture and discrimination behavior towards the economic growth rate of member countries of the Islamic Cooperation Organization (OIC) 2014-2017. The results of the research estimation using the technique of fixed effect (FE) from the panel data of the OIC countries show that religious tolerance measured using the freedom of religion index (FRI) shows a positive and significant effect on the economic growth rate; political participation as measured by political rights index (PRI) has a significant negative effect on the economic growth rate; marriage measured using the percentage of married woman (PMW) has a positive effect on the economic growth rate but is not significant; corruption culture measured using corruption perception index (CPI) has a negative and not significant effect on the economic growth rate; and discrimination behavior measured using discrimination and violence against minorities index (DVI) shows a negative and not significant effect on the economic growth rate.Keywords: Social Capital, Constructive, Destructive, Economic Growth, OIC Abstrak. Penelitian ini menginvestigasi pengaruh modal sosial konstruktif (constructive social capital) seperti toleransi beragama, partisipasi politik, dan pernikahan, serta modal sosial destruktif (destructive social capital) seperti budaya korupsi dan perilaku diskriminasi terhadap tingkat pertumbuhan ekonomi negara-negara anggota Organisasi Kerjasama Islam (OKI) 2014-2017. Hasil estimasi penelitian menggunakan teknik analisis fixed effect (FE) dari data panel negara-negara OKI menunjukkan bahwa toleransi beragama yang diukur menggunakan freedom of religion index (FRI) menunjukkan pengaruh positif dan signifikan terhadap tingkat pertumbuhan ekonomi; partisipasi politik yang diukur menggunakan political rights index (PRI) memberikan pengaruh negatif signifikan terhadap tingkat pertumbuhan ekonomi; pernikahan yang diukur menggunakan percentage of married woman (PMW) memiliki pengaruh positif terhadap tingkat pertumbuhan ekonomi namun tidak signifikan; budaya korupsi yang diukur menggunakan corruption perception index (CPI) memberikan pengaruh negatif dan tidak signifikan terhadap tingkat perumbuhan ekonomi; dan perilaku diskriminasi yang diukur menggunakan discrimination and violence against minorities index (DVI) menunjukkan pengaruh negatif dan tidak signifikan terhadap tingkat pertumbuhan ekonomi.Kata kunci: Modal Sosial, Konstruktif, Destruktif, Pertumbuhan Ekonomi, OKI
This paper attempts to introduce and apply the error correction method to estimate the simultanous-equation models and compares its results with the similar method in the case of single equation model.The empirical results show that the estimations in the case of simultanous-equation models have the similar conclusions with the case of single equation models since the fitted values of dependent variables in the reduced-form estimations are relatively close to its actual values. On the other hand, they will be quite diffrence if the fitted values of dependent variables in the reduced-form estimations quite differ from its actual values.The results show that short-run changes in money supply (M) and investment (I) have significant and positive effects on income (Y) while government expenditure (G) is insignificant and that about 0,9151% of the discrepancy between the actual and the long-run, or equilibrium, value of Y is corrected each year by the single equation assumption and 0,8706% by the simultanous-equation assumption.The results also show that short-run changes in income (Y) have significant and positive effects while interest rate (R) is insignificant on money supply (M) and that about 0,2327% of the discrepancy between the actual and the long-run, or equilibrium, value of M is corrected each year by the single equation assumption and 0,2346% by the simultanous-equation assumption.Keywords: ordinary least square, two stages least square, error correction method.
Inflation has always been being seen as one of the most important macroeconomic variables in modern economies. Every year, media especially in Muslim countries has constantly reported that inflation rates increase during the Islamic holy month of Ramadhan and Eid Ul Fitr. Remarkably, there has been hitherto almost no serious study focusing on the empirical relationship between Ramadhan, Eid Ul Fitr and inflation. This research aims to examine empirically whether Ramadhan and Eid Ul Fitr have a systematic effect on inflation. This research uses regression analysis technique and involves data from 66 local economies in Indonesia between January 2000 and December 2017. The finding of this paper is Ramadhan and Eid Ul Fitr have a positive effect on inflation. The possible reasons for explaining the results is the high of public demand. To overcome inflation in Indonesia not only from the role of government in controlling inflation rate, but also the role of Muslims community in controlling consumption.
The development of special areas of Batam began in the 1970s. With the support of special regulations made by the central government, Batam City becomes a competitive place for investment in Indonesia. Moreover Batam has geographical advantage because of its strategic location and adjacent to Malaysia and Singapore. However, problems arise when the central government begins to impose regional autonomy. The birth of Batam City caused an overlapping of authority between the Local Government of Batam and the Batam Authority which caused the management of Batam Island to be not harmonious. This study aims to identify the problem of institutional dualism that occurred between the Local Government of Batam and the Batam Authority and its impact on economic performance in Batam City. This research is explanatory, the data used are primary and secondary data. The results show the fact that the main problems in governance in Batam City is the occurrence of dualism authority between the Local Government of Batam and the Batam Authority. This is shown by the fact that the overlapping of authority between Local Government of Batam and the Batam Authority occurs in several sectors, especially in land management, overlapping licensing in Batam, airport and port management. This condition led to a decline in economic performance in Batam and the decline of Batam's economic competitiveness.