Does regional competitiveness promotes economic growth?
DOI:
https://doi.org/10.12928/optimum.v16i2.15403Keywords:
Regional Economy, Industry Sector, Competitiveness, Infrastructures, WagesAbstract
The relationship between regional competitiveness and economic growth is often assumed to be positive and mutually reinforcing. However, empirical evidence at the sub-provincial level, particularly in developing regions with heterogeneous economic structures, remains limited and inconclusive. This study examines the effects of industrial value added, infrastructure, regional competitiveness, and district/city minimum wages on Gross Regional Domestic Product (GRDP) across districts and cities in Central Java during the period 2022–2024. Using panel data regression and employing the Fixed Effect Model based on Chow and Hausman test results, this study finds that industrial value added and minimum wages exert a positive and statistically significant effect on GRDP, underscoring the importance of real economic activity and household purchasing power in driving short-run regional growth. Infrastructure shows a positive but statistically insignificant effect, while regional competitiveness exhibits a negative and significant relationship with GRDP. These findings suggest that improvements in competitiveness indicators do not always translate into immediate economic gains, particularly when structural readiness and sectoral integration remain uneven. This study contributes to the regional development literature by providing district-level evidence that challenges the conventional assumption of competitiveness-led growth and highlights the dominance of tangible economic factors in shaping short-term regional economic performance.
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