The Relationship Between Institutions and Business Opportunities Toward Economic Growth

Abstract

This study aimed at explaining the relationship, and effects of human capital, entrepreneurial business opportunities, institutional economics, and regional economic growth. It was carried out to develop fundamental microeconomic model in rural development to assist human capital roles and institutions as well as entrepreneurial business for the economic growth. Further, the researchers used simultaneous system method in form of a recursive correlational path analysis model. This modeling system provides simplicity and easy understanding. The main source of the data were the empirical micro fundamental data of the business doers in rural areas measured by Gini index ratio. The findings showed that human capital and institutions were the main pillars in improving the quality of regional economic growth. Interestingly, there was a strong relationship between business opportunities and economic growth. However, the business opportunities had significantly negative effect toward the regional economic growth. These indicate the existence of a disturbance outside the model, namely the presence of bank credit which apparently made the business doers suffered losses. In this way, there is a need to examine further the reasons why the bank credits given to MSMEs negatively effect the economic growth.

The Collaboration of Social Entrepreneurship and Institution for Sustainable Regional Development Security

“…Therefore, sample respondents need to be free from various political level interventions. Quantitative variable data is obtained using the Gini index value (IGX) measurement scale with the following formulation , 2020bPrasetyo, Setyadharma, & Kistanti, 2019).…”

“…Furthermore, formal and informal institutional factors are contextual components included in social progress and promote entrepreneurial opportunities to achieve higher economic growth levels (Aparicio, Turroo, & Noguera, 2020). This means that the economic institution's contribution to development has far exceeded the availability of natural resources, the supply of other production factors, and technological advances (Acemoglu & Robinson, 2008;Prasetyo & Dzaki, 2020;Prasetyo, Setyadharma, & Kistanti, 2019). A recent literature study showed that the configuration of institutional conditions and social capital has led to a high prevalence rate of various social entrepreneurship activities in a country (Deng et al, 2020).…”

Institutional Quality and Economic Growth in Muslim Countries

“…By creating and enforcing economic rules and regulations, these institutions play a significant part in shaping the economy (Salman et al, 2019). Solid institutions that provide a stable and predictable economic environment can aid private sector development (Phucet al, 2019;Prasetyo et al, 2020). In addition to helping the government run smoothly, they ensure that the rule of law is upheld and that power is not abused in a political context.…”