ANALYSIS OF THE EFFECT OF GOVERNMENT EXPENDITURE, FOREIGN INVESTMENT, AND ENVIRONMENTAL QUALITY INDEX ON ECONOMIC GROWTH IN EASTERN INDONESIA 2013-2023

Abstract

The eastern part of Indonesia has abundant natural resources, but its economic growth still lags behind other regions in Indonesia. Various challenges such as difficult geographical conditions, inadequate infrastructure, and uneven investment distribution are the main obstacles in accelerating economic development in Eastern Indonesia. This study aims to identify and analyse the factors that influence economic growth in Eastern Indonesia during the period 2013-2023. The focus of the study includes the role of government spending, foreign direct investment (FDI), and the Environmental Quality Index (EQI) in supporting economic growth in the region. The approach used in this study is the Generalised Method of Moments (GMM) method, with panel data analysis covering various provinces in eastern Indonesia. The main findings show that government spending has a significant impact on economic growth. On the other hand, foreign investment (FDI) and Environmental Quality (IKLH) do not have a significant impact on economic growth. The results highlight the important role of government spending as a key driver of economic development, as well as the need for more effective strategies to attract foreign investment and strengthen sustainable development approaches in eastern Indonesia