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The Role of Electricity and Energy Consumption Influences Industrial Development between Regions in Indonesia

Author

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  • Muhammad Fikry Hadi

    (Department of Economics, Faculty of Economic and Bussines, Universitas Muhammadiyah Riau, Indonesia.)

  • Muhammad Hidayat

    (Department of Economics, Faculty of Economic and Bussines, Universitas Muhammadiyah Riau, Indonesia.)

  • Dwi Widiarsih

    (Department of Economics, Faculty of Economic and Bussines, Universitas Muhammadiyah Riau, Indonesia.)

  • Neng Murialti

    (Department of Economics, Faculty of Economic and Bussines, Universitas Muhammadiyah Riau, Indonesia.)

Abstract

Our research aims to determine the effect of electricity distribution and energy consumption on industrial development dynamics that occur between regions in Indonesia by adding investment and inflation as control variables. The analysis tools that we use are static (Fixed Effect) and dynamic (GMM) panel data model with a dataset of 34 provinces for the 2012-2019 period. The static model results state that the distribution of electricity and investment has a significant positive effect on the industry, and so does energy consumption, but not significantly. In contrast, inflation has a significant negative effect. There are differences in dynamic results, namely, electricity distribution and energy consumption have a negative and significant effect on industrial development. These results suggest different actions in industrial development concerning timeframes.

Suggested Citation

  • Muhammad Fikry Hadi & Muhammad Hidayat & Dwi Widiarsih & Neng Murialti, 2021. "The Role of Electricity and Energy Consumption Influences Industrial Development between Regions in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 403-408.
    • Handle: RePEc:eco:journ2:2021-03-49
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    More about this item

    Keywords

    Electricity distribution; Energy consumption; Industry; GMM; Indonesia;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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