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All Journal Media Mahardhika Community Engagement and Emergence Journal (CEEJ) International Journal of Global Operations Research ABDI MOESTOPO: Jurnal Pengabdian pada Masyarakat Buletin Jalanidhitah Sarva Jivitam Jurnal Impresi Indonesia Jurnal Karya Abdi Masyarakat Economics Development Analysis Journal Jurnal Perikanan
Malau, Albert Gamot
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Journal : Economics Development Analysis Journal

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The Impact of MSME’s on Employment, Investment, and Income Malau, Albert Gamot; Mahjus Ekananda
Economics Development Analysis Journal Vol. 14 No. 2 (2025): Economics Development Analysis Journal
Publisher : Universitas Negeri Semarang

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.15294/edaj.v14i2.24026

Abstract

North Sumatra, a key economic region in Indonesia outside of Java, continues to face persistent challenges such as high unemployment, the dominance of the informal sector, and uneven economic growth. Within this context, Micro, Small, and Medium Enterprises (MSMEs) serve as a cornerstone of the regional economy, particularly through their role in labor absorption and income generation. Despite their significance, MSMEs in North Sumatra still face substantial obstacles, including limited access to financing, inconsistent investment growth, and inadequate policy implementation—factors that hinder their full potential in driving inclusive development. This study examines the dynamic relationship between MSME growth, workforce participation, and Gross Regional Domestic Product (GRDP) in North Sumatra, employing a simultaneous equation model with time-series data from 2009 to 2023. The Two-Stage Least Squares (2SLS) method addresses endogeneity and simulates the effects of policy interventions projected for the 2025–2030 period. The findings indicate that MSME development is significantly influenced by policy instruments such as tax incentives and minimum wage regulations. Increases in wages and tax reductions enhance labor absorption, stimulate MSME performance, and promote GRDP growth. The study provides practical policy insights for strengthening the resilience and sustainability of MSMEs within North Sumatra’s evolving economy.
Co-Authors Adrianto, Adrianto Afifuddin, Sya’ad Ami Pujiwati Angga Sucitra Hendrayana, Angga Sucitra Arthur Brown Basir, Mohammad Eha Saleha Faizal Madya Haholongan Simanjuntak, Haholongan Hidayah, Zainur Imas Maesaroh Irsad Lubis Kula Ginting Lutfi, Bahroni Mahjus Ekananda Marina, Nisha Nazzla, Rauzatul Orbita Roiyan Dhuha, Orbita Roiyan Panggabean, Donwill Rahmanta Rahmanta, Rahmanta Safitri, Julia Supriyadi, Sigit T. Ersti Yulika Sari Yuni Puji Hastuti