The Role of Government Expenditure and Investment for MSME Growth: Empirical Study in Indonesia

Abstract

In Indonesia, micro-, small-and medium-sized enterprises (MSMEs) are introduced to increase income by providing many easier jobs to improve economic growth. They have also been reported to be generally supportive of the local industry. The government policies on investment and expenditure have the ability to promote MSMEs and economic growth. Therefore, this research was conducted to analyze the theoretical background and empirical study to investigate government's role to promote MSMEs growth in Indonesia. The secondary data after the 2008 global financial crisis recorded quarterly from 2009 to 2019 Q3 were analyzed using the Ordinary Least Square (OLS) regression model. The results showed government expenditure has a positive and significant contribution to small-and medium-sized enterprises, but the effect was not significant for micro-businesses. Meanwhile, the investment sector was discovered to have a positive and significant effect on MSMEs. The policy implications of the Indonesian government are expected to focus on its expenditure's role as the most important factor for "social-economic protection of the community" through micro-enterprises, which are numerous and more attached to the real community economic-social life. Therefore, the existence of micro-businesses is very helpful for the lower classes despite their high vulnerability to crisis.

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

“…In this research, the social capital and entrepreneurship are a derivative of the human capital. The previous research shows that human capital is the main factor that drives productivity and economic growth (Prasetyo, 2020a(Prasetyo, , 2019b. This is in line with previous research showing that an entrepreneur needs to focus on investing in human capital to increase productivity (Hatak & Zhou, 2021).…”

“…The greater the speed of new technology deployment in business, the greater its contribution to productivity (Baumol, 1993). This means that entrepreneurship's role is important in the daily business environment and enhances a modern and productive world economy (Prasetyo, 2020a(Prasetyo, , 2020b. Social entrepreneurship has always been a concept often contested in academic discourse and practice (Abhi, 2017;Callavo, 2018).…”

“…Entrepreneurship has many positive impacts on economic growth, welfare, including social and environmental welfare, and unemployment reduction (Farouq & Dadwal, 2019;Neumann, 2021;Prasetyo, 2020aPrasetyo, , 2020b. Although the social entrepreneurship impact can be static and dynamic, it should be more transformative (Beckmann, 2012).…”

“…This is because social entrepreneurs may solve problems through collaboration with stakeholders, leading to sustainable community innovation (Kim et al, 2020). Therefore, social entrepreneurship continues to receive much attention due to its potential as a source of economic and social equity and its role in promoting sustainable development to address social, poverty, economic and environmental problems (Roundy & Bonnal, 2019;Khovrak, 2018;Starnawska & Brzozowska, 2018;Anderson & Gaddefors, 2016;Prasetyo, 2020aPrasetyo, , 2020b. Anderson and Ronteau (2017) reported that when entrepreneurship is a socio-economic process, it is vital to understand and influence social context aspects.…”

STRATEGI KOMPETITIF MELALUI PROGRAM PAHLAWAN EKONOMI DALAM PEMBERDAYAAN UMKM PASCA PANDEMI COVID-19 (Studi padaPemerintah Kota Surabaya)

“…Saat situasi krisis seperti saat ini maka diperlukan perlakuan khusus kepada UMKM yang berkontribusi besar dalam PDB nasional dan menjadi salah satu sumber penyerapan jumlah pengangguran terbanyak. Di negera berkembang, keberadaaan UMKM memiliki pengaruh yang signifikan terhadap pertumbuhan ekonomi (Prasetyo 2020). UMKM dianggap sebagai pendorong penting dalam pertumbuhan ekonomi dan pembangunan suatu negara karena membantu menciptakan peluang kerja, meningkatkan standar hidup dan mengurangi jumlah kemiskinan (Zeb and Ihsan 2020).…”