Economics, Econometrics and Finance
5 years ago

Negative impact of excessive infrastructure investment on Indonesia's economic growth.

International Journal of Advances in Scientific Research and Engineering
The Role of Infrastructure in Indonesia’s Economic Growth
Hanifatul Khurriah, Nurul Istifadah

Paper Summary

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The study looked at how different types of infrastructure in Indonesia affect the country's economic growth. They analyzed data from 34 provinces between 2011-2017. The results showed that water and telecommunications infrastructure have a positive impact on economic growth, while road infrastructure surprisingly had a negative impact. This means that having too much infrastructure investment can actually slow down economic growth by crowding out private capital. The study suggests that the right balance is needed to avoid inefficiencies and maximize growth.