The spatial econometrics of economic growth in Sumatera Utara province

Abstract

This study aims to analyze the economic growth of Sumatera Utara using an econometric spatial model. Euclidean distance and Moran’s I test were applied to determine the neighborhood and identify the autocorrelation. Based on the Lagrange Multiplier test, the spatial lag model (SAR) was considered. The R Shiny program, which was previously developed by the researcher, was used to estimate the model parameters. The SAR model's diagnostic checking shows that non-autocorrelation, normality, and homogeneity assumptions have been satisfied. Economic growth in the agricultural, forestry, and fishing sectors has a positive and significant effect on increasing economic growth in Sumatera Utara. A good strategy to increase the role of this sector could significantly improve the economy of Sumatera Utara. Coconut production has a positive and significant effect on increasing economic growth in Sumatera Utara. The unemployment rate has a negative and significant effect on the decreasing economic growth in Sumatera Utara. Reducing the unemployment rate could be one strategy to improve the economic growth of Sumatera Utara.