Journal of Regional Economics Indonesia
Vol. 7 No. 1 (2026): February 2026

Investment, Absorptive Capacity, and Regional Economic Growth: Explaining Heterogeneous Outcomes across Indonesian Provinces

Rusmiati, Rusmiati (Unknown)
Utari, Gaetri (Unknown)
Haq, Maulaya Arinal (Unknown)



Article Info

Publish Date
27 Feb 2026

Abstract

Regional economic growth remains a central concern in development economics, particularly in countries characterized by spatial disparities such as Indonesia. This study examines the relationship between investment and regional economic growth through a structured review of empirical studies published between 2018 and 2025. The analysis synthesizes findings from provincial-level research employing various econometric approaches, including panel data models, regression analysis, and path analysis. The results indicate that investment—both domestic and foreign—generally exerts a positive effect on regional economic growth. However, the magnitude and significance of this effect vary across regions. Evidence suggests that investment effectiveness depends on complementary factors such as human capital quality, infrastructure availability, macroeconomic stability, and institutional capacity. In regions with limited absorptive capacity, investment does not automatically translate into sustained growth. These findings highlight that investment-driven growth is conditional and requires integrated development policies to achieve inclusive and balanced regional economic performance.

Copyrights © 2026






Journal Info

Abbrev

jrei

Publisher

Subject

Economics, Econometrics & Finance

Description

The Journal of Regional Economics Indonesia welcomes studies on the themes of development economics, especially those concerning four main issues, namely: (i) regional finance; (ii) banking; (iii) human resources; and (iv) regional / spatial economics. These four issues are obtained through ...