The Linkage of Physical and Human Investments in Affecting Gross Domestic Product in Indonesia
The Linkage of Physical and Human Investments in Affecting Gross Domestic Product in Indonesia

Summary/Abstract: This study draws the influence between linkage of physical and human investments, to gross domestic product (GDP) in Indonesia. Therefore, the panel data regression model was used to explain this influence at the national level and in accordance with data classification into Java and Outside Java. The National and, Java and Outside Java classifications were clarified through a Chow test. As confirmed by the Hausman test, estimation results using the fixed-effect model indicated that direct domestic investment, direct foreign investment, and the human development index influence GDP at the national level and outside Java regions. By contrast, human development exerted no significant effect on GDP for regions located in Java Island. Thus, the contribution of this paper is to explain the role of regional development in examining the nexus among physical investment, human investments and gross domestic products.

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