The effect of unemployment, human development, and government expenditure on economic growth in Sumatra: Foreign direct investment as a moderating variable
DOI:
10.62941/irefi.v2i2.161Downloads
Abstract
This study examines the effect of unemployment, human development, and government expenditure on economic growth in Sumatra, Indonesia, while analyzing the moderating role of foreign direct investment (FDI). Using panel data from ten provinces in Sumatra covering the period 2011–2024, the study employs the fixed effect model (FEM) and moderated regression analysis (MRA). The findings indicate that unemployment has a negative and statistically significant impact on economic growth, whereas human development shows no significant effect. Government expenditure negatively and significantly affects economic growth. Furthermore, the moderation analysis reveals that FDI significantly strengthens the effect of government expenditure on economic growth, but does not moderate the effects of unemployment or human development. These results underscore the strategic importance of integrating investment inflows with effective fiscal policies to stimulate regional economic growth.
Keywords:
Unemployment human development government expenditure economic growth foreign direct investmentReferences
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