The Impact Of Regional Spillover Effects On Economic Growth Districts/Cities In Central Java

Isna Febriyana, Lilis Siti Badriah, Agus Arifin, Iman Widhiyanto

Abstract


This study investigates the regional spillover effects on the economic growth of districts and cities in Central Java. The primary objective is to assess the impact of interregional interactions on economic growth through four main channels: (a) knowledge spillover, (b) industry spillover, (c) private investment spillover, and (d) government expenditure spillover. The research sample comprises 35 districts/cities in Central Java, covering the period from 2018 to 2023. Spatial panel regression analysis is employed to analyze the data. Among the panel data models considered, the Random Effect Model is identified as the most suitable. Spatial analysis is also conducted to explore correlations related to the geographical layout between regions. The findings, based on the Spatial Durbin Model Random Effect, indicate that knowledge spillover, industry spillover, private investment spillover, and government expenditure spillover have a positive impact on economic growth. Additionally, these spillover effects exhibit spatial autocorrelation, suggesting that the economic growth of a district or city is significantly influenced by the economic activities in neighboring regions. This study highlights the importance of regional interactions and the spatial dimension in formulating policies aimed at fostering economic growth in Central Java.

Keywords: Regional Spillover, Economic Growth, Spatial Panel Regression, Central Java.


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