Economic Growth Convergence of Indonesia and 10 Main Trading Partner Countries

International Journal of Economics and Management Studies

© 2021 by SSRG - IJEMS Journal

Volume 8 Issue 5

Year of Publication : 2021

Authors : Titin Siti Mahfudhotin Amin

10.14445/23939125/IJEMS-V8I5P105

How to Cite?

Titin Siti Mahfudhotin Amin, "Economic Growth Convergence of Indonesia and 10 Main Trading Partner Countries," SSRG International Journal of Economics and Management Studies, vol. 8,  no. 5, pp. 49-54, 2021. Crossref, https://doi.org/10.14445/23939125/IJEMS-V8I5P105

Abstract:

Economic growth and economic welfare represented by per capita income in each country have differences, resulting in economic disparities. Country with lower-income per capita relatively tries to catch up the income inequality against higher-income country. This process is called convergence of economic growth. Based on the data, it is known that Indonesia has differences in economic growth with its main trading partner countries. Therefore, this study aims to see whether there is convergence of economic growth in Indonesia and the main trading partner countries. Convergence analysis includes sigma convergence, absolute beta convergence and conditional beta convergence. The calculation of the sigma convergence uses the calculation of the coefficient of variation and the calculation of the beta convergence uses panel data regression. The research period is 2009 - 2018. The results showed that there was a decrease in the coefficient of variation during the study period so that sigma convergence was occured. The panel data regression results show absolute beta convergence and conditional beta convergence were occured in Indonesia and its main trading partner countries. In addition, it was known that foreign direct investment had a positive and significant effect on economic growth as represented by per capita income.

Keywords:

Absolute Beta convergence, Conditional Beta Convergence, Economic Growth, Per Capita Income, Sigma convergence.

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