The Role of Small and Medium Enterprises (SMES) and Economic Growth in Indonesia: The VECM Analysis

DOI

10.2991/ahsseh.k.210122.017How to use a DOI?

Keywords

Small and Medium Industries, Economic Growth, Number of SMEs, Workforce of SMEs

Abstract

This study explored the causal relationship between the role of SMEs (number of SME, the workforce of SMEs) and economic growth in Indonesia. Secondary data of time series for the period 1999-2019. The research method uses Vector Error Correction Model (VECM) analysis with stationary Augmented Dickey-Fuller (ADF) test, optimal lag, Johansen cointegration test, Granger Causality test, and Impulse Response Function (IRF). The result shown that the variables of the number of SMEs and economic growth are related to one-way causality. In contrast to the variable number of workers and economic growth in Indonesia, there is no one-way or two-way causality relationship. The results of the VECM analysis also prove that in the short term there is a significant positive effect on the number of SMEs at lag-1 on economic growth and there is long-term cointegration between economic growth, the number of SMEs and the SME workforce.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Aladin Aladin
AU  - Evada Dewata
AU  - Yuliana Sari
AU  - Yuli Antina Aryani
PY  - 2021
DA  - 2021/01/25
TI  - The Role of Small and Medium Enterprises (SMES) and Economic Growth in Indonesia: The VECM Analysis
BT  - Proceedings of the 4th Forum in Research, Science, and Technology (FIRST-T3-20)
PB  - Atlantis Press
SP  - 95
EP  - 99
SN  - 2667-128X
UR  - https://doi.org/10.2991/ahsseh.k.210122.017
DO  - 10.2991/ahsseh.k.210122.017
ID  - Aladin2021
ER  -