The Competitiveness of Regions in the Eastern Indonesia

Abstract

This study aims to map the regionals competitiveness and examine the influence of several factors including health, education, infrastructures, institution, and information and communication technology (ICT) on regional competitiveness, both directly and indirectly through government expenditure and private investment in the Eastern Indonesia. The data used are cross section data of 16 provinces in the Eastern Indonesia and time series data from 2010 to 2016. The standardized score was used to calculate the score of competitiveness based on four indicators: productivity, GRDP per capita, level of employment opportunities, and consumption expenditure per capita. Econometric model with simultaneous equation model was used to analyze the influence of driving factors on regional competitiveness. The driven factors that have significant effect on regional competitiveness are health, education, infrastructures and ICT. While institution factors do not yet have effective contributed to the improvement of regional competitiveness. In an effort to improve the competitiveness of regions, the importance of local governments to adopt policies that rely on improving the capacity and quality of human capital, provision of electricity infrastructure, as well as adequate information and communication networks.