Analysis of Economic Development Disparities Between Districts in North Sumatra

Abstract

This study aims to determine and analyze the effect of GDP, population, development expenditure and unemployment rate on the imbalance of economic development between districts / cities in North Sumatra. Data were taken from 2010 - 2017 in 33 districts throughout northern Sumatra. The data collected were analyzed using panel data regression. From the test data using Chow test and Haussmann test then the panel data regression used is fixed effect method. Collectively the GDP variables, population, development expenditure and unemployment rate affect the variables of economic inequality with R-square of 0.9949. GDP has a negative and significant effect; the number of influential population and development expenditure has a positive and significant effect on the disparity of economic development while the unemployment rate has no significant effect on economic development in North Sumatra. To reduce the inequality or disparity of economic development, the government should continue to improve the performance of the economy by finding new sources of revenue and budget efficiency that can be used for development in every sector.

Keywords: Economic Disparity, Fixed Effect Method, Panel Data Regression