Jurnal Relevansi : Ekonomi, Manajemen dan Bisnis
Vol 10 No 5 (2026): October

​Determinants of Regional Economic Growth in Indonesia: A Literature Review and Policy Implications

Gde Indra Surya Diputra (Universitas Hindu Indonesia)
Gede Agus Dian Maha Yoga (Universitas Hindu Indonesia)



Article Info

Publish Date
02 Oct 2026

Abstract

This study synthesizes empirical literature on the determinants of regional economic growth in Indonesia to identify consistent patterns and policy gaps. Regional growth disparities between Java and outer islands remain a persistent structural challenge despite stable national growth. Using a narrative literature review approach, this study examines peer-reviewed research published mainly between 2020 and 2026 on investment, government expenditure, fiscal decentralization, infrastructure, human capital, digital economy, and regional inequality through panel data, spatial econometric, and convergence-club approaches. The findings indicate that investment and regional government expenditure generally promote Gross Regional Domestic Product (GRDP) growth, although capital expenditure may have delayed or negative short-term effects. Human capital, particularly education and health, emerges as a key determinant, while fiscal decentralization requires adequate human development quality to generate sustainable growth. Convergence and spatial studies reveal persistent regional disparities and multiple growth equilibria across Indonesian districts. The digital economy and Micro, Small, and Medium-sized Enterprises (MSMEs) represent growing but uneven drivers of regional development. This study contributes by integrating fragmented empirical findings into a coherent thematic framework. Its main limitation is the narrative and non-systematic review design, which limits causal interpretation. The findings suggest that regional development policies should combine fiscal, infrastructure, human capital, and digital strategies rather than relying on a single policy instrument.

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Journal Info

Abbrev

relevansi

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Social Sciences

Description

Jurnal Relevansi: Jurnal Ekonomi, Manajemen, dan Bisnis  is a peer-reviewed journal. Ekombis invites academics and researchers who do original research in the fields of economics, management, and accounting, including but not limited to: Economics      Monetary Economics, Finance, and Banking ...