THE EFFECT OF INVESTMENT, LABOR ABSORPTION RATE, AND EDUCATION LEVEL ON ECONOMIC GROWTH IN CENTRAL JAVA PROVINCE

This research is motivated by Central Java Province, which ranks second with the lowest economic growth in Java Island. In addition, the disparity and fluctuations in economic growth between regencies and cities each year are the main problems in development in Central Java Province. This study aims to analyze the impact of domestic investment, foreign investment, employment absorption rates, and education levels on economic growth in Central Java Province. The data used in the research is secondary data sourced from the BPS and the DJPK from 35 regencies/cities in Central Java for the period of 2021-2024. The method used is panel data regression analysis with a Fixed Effects Model (FEM) approach. The results of the study indicate that domestic investment and education levels have a significant positive effect on economic growth in Central Java Province. Meanwhile, foreign investment and labor absorption rate do not show significant impact. Among all variables, education level is the most influential factor on the economic growth of this province. The implication of this research is the need to improve domestic investment and the quality of education in driving regional economic growth. Local governments need to create a conducive investment climate through the provision of adequate infrastructure and ease of licensing for investors. The education sector also needs serious attention through improving access, the quality of educators, and the relevance of the curriculum to the needs of the labor market.