Unlocking Inclusive Growth: The Impact of Shariah Investment in Indonesia
Abstract
This study investigates the role of Shariah investment in Indonesia's inclusive growth. Shariah investment is measured in terms of Shariah stocks and sukuk. As determinants of inclusive growth, the study also includes several control variables adopted from separate literature, including the effect of COVID-19. In contrast to previous research, testing is conducted using a variety of inclusive growth metrics. Using principal component analysis (PCA) to compute the composite index of inclusive growth and time series regression models with monthly data at the national level from 2011 to 2022, this study finds three main conclusions. Evidence shows that Shariah investment contributes to inclusive growth in Indonesia, but the effects vary. Shariah stocks significantly affect poverty and unemployment, whereas Sukuk affects poverty and inequality. Both contributed to improving the Human Development Index (HDI) and inclusive growth. This study also revealed that COVID-19 was instrumental in reducing Indonesia's inclusive growth performance. This study complements prior empirical research on inclusive growth issues in Indonesia by examining the role of Islamic economics and finance. This research contributes to future policy initiatives to strengthen Indonesia's inclusive growth.
JEL Classification: D24, O14, O4
How to Cite:
Indra & Ibrahim, M. Y. (2023). Unlocking Inclusive Growth: The Impact of Shariah Investment in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 12(2), 263-274. https://doi.org/10.15408/sjie.v12i2.31935
Keywords
References
Abd. Majid, M. S., dan H. Kassim, S. (2015). Assessing the contribution of Islamic finance to economic growth: Empirical evidence from Malaysia. Journal of Islamic Accounting and Business Research, 6(2), 292–310. https://doi.org/10.1108/JIABR-07-2012-0050
Adeosun, O.A., Orisadare, M.A., Fagbemi, F. and Adedokun, S.A. (2020), “Public investment and private sector performance in Nigeria”, International Journal of Emerging Markets. doi: 10.1108/IJEOM-02-2020-0144.
Amin, R. M., Yusof, S. A., Haneef, M. A., Muhammad, M. O., dan Oziev, G. (2015). The Integrated Development Index ( I-Dex ): A new comprehensive approach to measuring human development Islamic Economics : Theory , Policy and Social Justice. In Islamic economic: Theory, policy and social justice. (Issue September).
Anand, Rahul, Saurabh Mishra and Shanaka J. Peiris. (2013). “Inclusive Growth: Measurement and Determinants,” IMF Working Paper 13/135 (Washington: International Monetary Fund).
Aziz, MN. dan Mohamad, OB. (2016). "Islamic social business to alleviate poverty and social inequality," International Journal of Social Economics, Emerald Group Publishing, vol. 43(6), pages 573-592.
Banna, H. and Alam, M. R. (2020). Islamic Banking Efficiency and Inclusive Sustainable Growth: The Role of Financial Inclusion. Journal of Islamic Monetary Economics and Finance, Vol. 6, No.1 (2020), 213-242.
Berg, Andrew and Jonathan D. Ostry. (2011). “Inequality and Unsustainable Growth: Two Sides of the Same Coin?” IMF Staff Discussion Note 11/08 (Washington: International Monetary Fund).
Blau, J. (1989), “Theories of the welfare state”, Social Service Review, Vol. 63 No. 1, pp. 26-38
Can, M. (2009). Parameters of the Islamic Economic System. International Symposium on Sustainable Development, 24–31.
Crafts, N. F. R. (1997). Some dimensions of the quality of life during the British industrial revolution. Economic History Review, 50(4), 617–639.
Dartanto, T. (2013). Why is growth less inclusive in Indonesia? MPRA Paper No. 65136. Online at http://mpra.ub.uni-muenchen.de/65136/.
Easterly, W. and Rebero, S. (1993), “Fiscal policy and economic development: an empirical
investigation”, Journal of Monetary Economics, Vol. 32, pp. 417-458.
Fasih, F. (2012). Inclusive growth in India through Islamic banking. Procedia - Social and Behavioral Sciences, 37(Icee), 97–110. https://doi.org/10.1016/j.sbspro.2012.03.278
Gonzales, I. and Resosudarmo B.P. (2016). A sectoral growth-income inequality nexus in Indonesia. Working Papers in Trade and Development No. 2016/15. Australian National University.
Hastuti, ES. (2017). Sukuk Tabungan: Investasi Syariah Pendorong Pembangunan Ekonomi Inklusif. Jurisprudence, Vol. 7 No. 2 Desember 2017
Hayashi, M., Kataoka, M. and Akita, T. (2012), “Spatial dimensions of expenditure inequality and the role of education in Indonesia: an analysis of the 2008-2010 Susenas panel”, Economics and Management Series EMS-2012-21, The International University of Japan.
IMF (International Monetary Fund). (2007). “Globalization and Inequality.” In World Economic Outlook, chapter 4. Washington, DC.
Ibrahim, M. Y., & Indra, I. (2021). An Empirical Analysis of Islamic Banking (IBs) Contribution to Indonesia’s Inclusive Growth. International Journal of Islamic Economics and Finance (IJIEF), 4(SI). https://doi.org/10.18196/ijief.v4i0.10342
Indra, I., Nazara, S., Hartono, D., & Sumarto, S. (2018). "Expenditure inequality and polarization in Indonesia, 2002-2012," International Journal of Social Economics, Emerald Group Publishing, vol. 45(10), pages 1469-1486
Kang, H. dan Martinez-Vazques, J. (2021). When Does Foreign Direct Investment Lead to Inclusive Growth? International Center for Public Policy Working Paper 21-04. Andrew Young School of Policy Studies Georgia State University.
Kraay, Aart. (2004). “When is Growth Pro-Poor? Cross-Country Evidence,” IMF Working Paper 04/47 (Washington: International Monetary Fund).
Latifah, S. (2020). Peran Sukuk Surat Berharga Syariah Negara (SBSN) dalam Pertumbuhan
Pembangunan Ekonomi Indonesia. Jurnal Ilmiah Ekonomi Islam, 6(03), 421-427.
doi:http://dx.doi.org/10.29040/jiei.v6i3.1369
Lopez, H., and L. Servén. (2004). “The Mechanics of Growth-Poverty-Inequality Relationship.” Mimeo, World Bank, Washington, DC.
Pindyck, R.S. and Rubinfeld, D L. (1998). Econometric models and economic forecasts (4ed). New York :: McGraw-Hill,
UNDP. (2005). Human development report. New York: United Nations Development
Programme. Retrieved from http://www.ipc-ndp.org/pages/newsite/menu/inclusive/whatisin
clusivegrowth.jsp?active=1
Yusuf, A.A., Sumner, A. and Rum, A. (2014), “Twenty years of expenditure inequality in Indonesia, 1993–2013”, Bulletin of Indonesian Economic Studies, Vol. 50 No. 2, pp. 243-245
DOI: 10.15408/sjie.v12i2.31935
Refbacks
- There are currently no refbacks.
