Rona Wulan Ningtiyas (1), Ririt Iriani Sri Setiawari (2)
General Background: Regional economic growth is a key macroeconomic indicator for evaluating welfare improvement, industrial development, income generation, and distribution of development outcomes. Specific Background: East Java experienced fluctuating economic growth during 2006–2025, while domestic investment, foreign investment, and labor absorption expanded within the regional economy. Knowledge Gap: The empirical condition in East Java showed a mismatch between capital accumulation, labor growth, and stable regional economic acceleration, creating a gap with neoclassical growth assumptions and prior studies on regional growth determinants. Aims: This study aimed to evaluate the partial and simultaneous roles of Domestic Investment, Foreign Direct Investment, and Labor in East Java’s economic growth from 2006 to 2025. Results: Using a quantitative verificative approach, secondary time-series data with 20 observations were analyzed through a Lin-Log multiple linear regression model using EViews 12. Domestic Investment showed a negative and non-significant result, while Foreign Direct Investment showed a positive but non-significant result at the 5% significance level. Labor showed a negative and significant result at the 10% significance level, supporting the Law of Diminishing Returns. Simultaneously, all independent variables significantly related to economic growth, and the econometric model passed all classical assumption tests. Novelty: This study applies a Lin-Log model to re-examine investment and labor dynamics across a twenty-year East Java macroeconomic timeline. Implications: The findings can support regional policy adjustment related to capital-intensive investment direction and labor market structural reform.
Highlights:
Keywords: Domestic Investment, Foreign Investment, Labor, Economic Growth, Lin-Log Model
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