PMDN, PMA and Labor Factors as the Indicators of the Success of Development in Province of Maluku: An Application of New Growth Theory

Abstract

The main purposes of the research are to analyze: (i) the effect of technological progress (A), capital by proxy of PMDN (domestic investment) and PMA (foreign investment), Labor (L) and human development (H) on economic growth, (ii) the effect of economic growth (Y) of public expenditures in health area (GEK) and of public expenditure in educational area (GEP) on human development, and (iii) the effect of health index (INKES), education index (INPDDK), and purchasing power index (INDB) on the productivity of labor in the Province of Maluku.The method used in this research was an explanatory method and the type of research was verificative. The data used was panel data with a secondary data type consisting of time series data for 2004-2010 and cross-section in 8 (eight) regencies/municipalities. The method of parameter estimation was by using a Two Stage Least Square (TSLS) method for economic growth and human development equation as a simultaneous equation and productivity equation as a single equation, each with Fixed Effect Model (FEM).The research results showed that (i) Technological progress, capitals by proxy of PMDN and PMA, labor, and human development have a positive and significant effect on economic growth, (ii) Economic growth has a positive and insignificant effect, whereas public expenditures in health and educational areas have a positive and significant effect, on human development, and (iii) health index has a positive and significant effect, and educational and purchasing power indexes have a positive and insignificant effect, on the productivity of labor, whereas purchasing power index has a positive effect on the productivity of labor in the Province of Maluku.