| Summary: | Faizal Reza, 2012. Impact of Education on Economic Growth in Indonesia
Province: Neoclassical Approach and New Growth Theory, under the guidance of
Budiono Sri Handoko.
Does education affect economic growth?, The aim of this study was to find the
impact of education on economic growth in Indonesia provinces by using the
Neoclassical approach and New Endogenous Growth Theory. This thesis uses panel
data methods to investigate the relationship between education and economic growth
in Indonesia during the period 2000-2010. The results showed that although there are
differences in the assumptions between two approaches, but both were able to explain
the impact of education on growth variables very well. In Neoclassical approach,
education has positive and significant impact on growth through its growth rate.
While on the other hand, NGT through its productivity show to us the important role
of education in derive growth through innovation and diffusion of technology. The
result also showed to us that although in general category of the provinces gain
benefit from education to facilitate innovation, but there are only a few categories of
provinces are able to get educational benefits in facilitating technology diffusion (i.e.
the upper and lower provinces). Finally, the findings generally reinforce the
hypothesis that the leaders will continue to innovate and maintain their position while
the follower regions tend to perform diffusion to pursue areas that have been
developed.
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