The Effects of Consumption, Private Investment, and Government Expenditures on Economic Growth in South Sulawesi, Indonesia

Abstract

Economic growth of one country is affected by many factors. This study was aimed to explain the effects of consumption, private investment, and government expenditures on economic growth in South Sulawesi, Indonesia either simultaneously or partially. The sources of data had been recorded from publications issued by the Central Statistics Agency and Investment Promotion Agency in the period 2001-2010. The techniques used to address the problem were a multiple linear regression analysis and a classical test assumption. The research findings indicated that simultaneously, household consumption, private investment, and government expenditures had significant and positive effects on the economic growth, either simultaneously or partially. Then, based on the classical assumption analysis, the results showed that the regression equation model was appropriate in predicting variables of economic growth as the dependent variable, because of the four classical analysis assumptions (normality, autocorrelation, heteroscedasticity, and multicollinearity test obtained a non-biased test value. It was concluded that an increase in consumption, private investment and aggregate demand from year to year could boost the economic growth. The government is expected to issue a new policy that could encourage both domestic investors and foreign investments in areas, so that economic growth could be improved.

Keywords: consumption, investment, expenditures, economic growth