Analysis of the Influence of Foreign Labor, Local Labor, and Investment on the Gross Regional Domestic Product of Central Java Province
Keywords:
Foreign Labor, Local Labor, Investment, GDP, Central Java, Economic Growth, Multiple Linear Regression.
Abstract
Economic globalization has driven increased investment flows and labor mobility across countries, including Indonesia, which is one of the main destinations for foreign investors and workers in Southeast Asia. This study aims to analyze the influence of foreign workers (TKA), local labor (TKL), and investment on the Gross Regional Domestic Product (GDP) in Central Java Province. This study uses secondary data in the form of numerical data from 2013 to 2023, which was collected in the period December 2024 to March 2025. Data sources include GDP on a constant price basis (ADHK), the number of licensed foreign workers, and local workers who work. The analysis was carried out by multiple linear regression using the EViews 12 software. The results of the study show that the local workforce has a positive and significant influence. Foreign investment (PMA) also has a significant and positive effect on GDP, while domestic investment (PMDN), although it has a positive effect, is not statistically significant. On the other hand, foreign workers did not show a significant influence on Central Java's GDP, which indicates that the contribution of foreign workers is still limited in encouraging regional economic growth.
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Agusmidah. (2010). Indonesian Labor Law: Dynamics and Theoretical Studies. Ghalia Indonesia.
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Anonymous. (2023). GDP on a constant price basis by district/city in Central Java Province (million rupiah), 2013–2023. Central Java Statistics Agency.
Anonymous. (2023). Number of labor force in Central Java Province (people), 2013–2023. Central Java Statistics Agency.
Arsyad, L. (2010). Development economics (5th ed.). UPP STIM YKPN.
Becker, G. S. (1993). Human capital: A theoretical and empirical analysis, with special reference to education. The University of Chicago Press.
Borjas, G. J. (2013). Labor economics. McGraw-Hill.
Dani Pramusinto, N., & Daerobi, A. (2019). National Seminar & Call for Paper Seminar on Business Master of Management.
Dessy, D., Wulandari, T., Soelistyo, A., & Kusuma, H. (2020). The effect of the exchange rate, domestic investment (PMDN), and government expenditure in the education sector on economic growth in Indonesia. Journal of Economics (JIE), 4(3).
Dornbusch, R., Fischer, S., & Startz, R. (2018). Macroeconomics. McGraw-Hill Education.
Fajriawati. (2018). Analysis of the influence of foreign labor on economic growth has an impact on the unemployment rate in North Sumatra. Journal of Economics and Development Studies, 18.
Fatimah Nur, C. (2019). FDI trend and its contribution toward labor absorption in East Java. JIAP, 5(3).
Ghozali, I., & Ratmono, D. (2017). Multivariate analysis and econometrics (Edition 2). Publishing Agency of Diponegoro University.
Haliza, F. N. (2022). Analysis of the influence of foreign workers (TKA) on employment opportunities, wage levels and economic growth in Indonesia in 2006–2020 [Thesis, Tidar University].
Hamid Shahab, A., Alwi, M., & Ayu Arini, G. (2025). Analysis of the influence of foreign direct investment, domestic investment, and labor on economic growth in Indonesia in 2014–2023. Journal of Educational Multidisciplinary Research, 2, 137–150. https://journal.hasbaedukasi.co.id/index.php/jurmie
Jamil, P. C., & Hayati, R. (2020). Foreign investment in Indonesia. KIAT Economic Journal, 31(2). https://journal.uir.ac.id/index.php/kiat
Jhingan, M. L. (2012). Macroeconomic theory (12th ed.). Vrinda Publications (P) Ltd.
Jufrida, F., Nur Syechalad, M., & Nasir, M. (2016). Analysis of the influence of foreign direct investment (FDI) and domestic investment on Indonesia's economic growth. 2(1).
Krugman, P. R., & Obstfeld, M. (2005). International economics: Theory and policy. Pearson/Addison Wesley.
Lestari, U., & Idris, M. (2019). The role of farmer groups in cocoa farming activities in Ketulungan Village, Sukamaju District, North Luwu Regency. Indonesian Journal of Agribusiness, 7(2), 92–101. https://doi.org/10.29244/jai.2019.7.2.92-101
Mankiw, N. G. (2014). Principles of economics (7th ed.). Cengage Learning.
Nardo, R., et al. (2022). Human Capital Management.
Novianto, T. F., & Atmanti, H. D. (2013). Analysis of the influence of regional original income, investment and labor force on GDP growth.
Rachman, A., Smanlangi, Y., & Purnomo, H. (2024). Quantitative, qualitative and R&D research methods (B. Ismaya, Ed.). CV Saba Jaya Publisher.
Rahayu, Y. (2020). The effect of wages and education levels on unemployment. Journal of Development, 8(2).
Rizky, M. (2020). The influence of foreign workers (TKA) and professionally certified workers on employment opportunities in Indonesia [Thesis, UIN North Sumatra].
Setiawan Permadi, B., & Ketut Gunawan, I. (2019). A study on the utilization of local labor in national companies in the coal sector. 7(2), 837–852.
Setijawan, B., Anwar, N., & Suharno, S. (2021). The influence of investment, labor and government expenditure on economic growth in Central Java Province. J-MAS (Journal of Management and Science), 6(2), 332. https://doi.org/10.33087/jmas.v6i2.274
Simanjuntak, P. J. (1998). Introduction to the economics of human resources (Ed. 2). FEUI Issuing Board.
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1).
Sugiyono. (2021). Qualitative research methods. CV Alphabet.
Sukrino, S. (2006). Macroeconomics: Introductory theory (3rd edition). Raja Grafindo Persada.
Tanjung, A. H., et al. (2024). Analysis of provincial GDP on the influence of various factors in the socio-economic sustainability of Central Java. Journal of Entrepreneurial Economics, 1(2). https://doi.org/10.61511/jane.v1i2.2024.1004
Todaro, M. P., & Smith, S. C. (2020). Economic development. Pearson.
Wulandari, D., & Woyanti, N. (2023). The influence of education, minimum wage, and formal sector employment opportunities on educated unemployment in West Java Province (2017–2021). Business Economic Entrepreneurship, 6.
Yuliastuti, A., et al. (2018). The impact of investment and foreign labor on the employment opportunities of Indonesian workers. Journal of Manpower, 13(1).
Published
2025-06-23
How to Cite
Maulana Al Qodry, & Syamsul Huda. (2025). Analysis of the Influence of Foreign Labor, Local Labor, and Investment on the Gross Regional Domestic Product of Central Java Province. International Journal of Economics, Business and Innovation Research, 4(04), 557-574. https://doi.org/10.63922/ijebir.v4i04.1981
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