MATARAM, Formosa News — Economic growth in West Nusa Tenggara (NTB) is associated with lower open unemployment, but stronger economic activity does not automatically guarantee broad job creation. A 2026 study by Sahruddin, Heru Subiyantoro, and Yolanda, affiliated with Universitas Borobudur Indonesia, examines how labor force participation, MSME financing, education, and domestic investment shape economic growth across eight districts in NTB. The findings show that these four factors jointly explain about 61.25 percent of the variation in economic growth, while higher economic growth is significantly associated with a lower open unemployment rate.
The research is particularly relevant for NTB because the province has substantial economic potential in agriculture, tourism, and micro, small, and medium enterprises (MSMEs). At the same time, economic development remains uneven across regions, creating different employment and income opportunities for communities.
NTB’s Economic Growth Shows Regional Differences
The article reports an average economic growth rate of 3.02 percent across the districts included in the analysis, while the average open unemployment rate stood at 3.22 percent. Average MSME growth was recorded at 1.10 percent, the education index at 2.25 percent, and domestic investment at 36.69 percent.
The figures also show substantial differences between districts.
Lombok Timur recorded economic growth of 3.81 percent, while Sumbawa reached 3.62 percent and Dompu 3.56 percent. Meanwhile, Sumbawa Barat recorded -0.46 percent in the table presented by the researchers.
Open unemployment also varied considerably. Lombok Utara recorded the lowest figure at 1.78 percent, while Sumbawa Barat recorded 4.91 percent.
These differences indicate that economic performance cannot be understood simply through provincial averages. The structure of each local economy, the quality of its workforce, investment patterns, and the capacity of businesses to absorb workers can all influence outcomes.
Four Economic Factors Under the Microscope
Sahruddin, Heru Subiyantoro, and Yolanda analyzed data covering eight districts in NTB over the 2015–2024 period.
The researchers used secondary data from the Central Statistics Agency (BPS) of West Nusa Tenggara and the NTB Satu Data portal. Because all eight districts were included, the researchers used the entire population of the selected regional units as their observations.
The analysis focused on four main factors:
- Labor Force Participation Rate (TPAK)
- MSME financing or credit
- Education Index
- Domestic investment or PMDN
The researchers then examined how these variables were related to economic growth and how economic growth was associated with the open unemployment rate.
The analysis used panel-data regression with a fixed-effects model, allowing differences between regions and changes over time to be considered. The data were processed using EViews 13.
Labor, MSMEs, Education and Investment Support Growth
The statistical results indicate that the four factors jointly have a significant relationship with economic growth in the NTB districts examined.
The model produced an R-squared value of 0.612468, which the authors interpret as approximately 61.25 percent of the variation in economic growth being explained by labor force participation, MSME financing, education, and domestic investment. The remaining 38.75 percent is associated with factors outside the model.
Those other factors may include infrastructure, inflation and price stability, foreign investment, institutional quality, technology and innovation, as well as leading regional sectors such as tourism, agriculture, and industry.
The finding highlights the interconnected nature of regional development. A larger workforce can support economic activity, but the benefits are greater when workers have the skills required by the economy and when sufficient employment opportunities are available.
MSMEs also have an important role because they can contribute to local economic activity and employment. Access to financing can help businesses expand their operations, improve productivity, and develop new opportunities.
Education provides another long-term foundation by strengthening workforce capabilities, while domestic investment can expand production capacity and stimulate economic activity.
Economic Growth Is Associated with Lower Unemployment
One of the study’s most important findings concerns the relationship between economic growth and unemployment.
The fixed-effects regression produced a probability value of 0.0304, below the 0.05 significance threshold. The coefficient for economic growth was negative, indicating a significant negative relationship between economic growth and the open unemployment rate in the districts studied.
The model recorded an R-squared value of 0.566806, meaning economic growth explained approximately 56.68 percent of the variation in the open unemployment rate within the model. The remaining 43.32 percent was associated with other factors outside the analysis.
The authors interpret the negative coefficient as evidence that stronger economic growth tends to be accompanied by lower unemployment. Their discussion also notes that the effectiveness of this relationship depends on the type of economic activity driving growth and its ability to absorb workers.
The Jobless Growth Question
The researchers also highlight an important qualification: economic growth does not always translate into employment at the same pace.
The article refers to this possibility as jobless growth, a situation in which economic output increases without a corresponding expansion in employment opportunities. This can occur when economic growth is concentrated in sectors that rely more heavily on capital and technology than on large numbers of workers.
For NTB, this means that policymakers need to consider not only how fast the economy grows but also where growth occurs and how many people can participate in it.
A tourism, agricultural, industrial, or MSME sector that expands while creating opportunities for local workers can generate broader economic benefits than growth that produces limited employment.
Building More Inclusive Economic Growth
According to Sahruddin, Heru Subiyantoro, and Yolanda of Universitas Borobudur Indonesia, the findings point toward the importance of inclusive economic development.
The researchers emphasize several areas that can support this direction, including improving workforce quality, strengthening MSMEs, expanding educational opportunities, and promoting a more balanced distribution of investment. These measures can help connect economic growth with employment creation and improvements in community welfare.
For policymakers, the findings suggest that employment should remain an important consideration when designing regional economic strategies.
Improving access to education and workforce training can help residents compete for emerging opportunities. Supporting MSMEs can strengthen local businesses and their potential to employ workers. More evenly distributed investment can also help reduce differences between regions.
The research therefore presents economic growth as an important component of reducing unemployment, while also emphasizing that the quality, structure, and inclusiveness of growth determine how strongly communities benefit from it.
Author Profile
Sahruddin, Heru Subiyantoro, and Yolanda are affiliated with Universitas Borobudur Indonesia. Sahruddin is also listed with an affiliation at Universitas Indraprasta PGRI, Indonesia. Their article focuses on regional economic growth, employment, MSMEs, education, domestic investment, and open unemployment in West Nusa Tenggara.
Research Source
Article Title: Analysis of Factors That Influence Economic Growth and Its Impact on the Open Unemployment Rate. Districts in West Nusa Tenggara Province (NTB)
Authors: Sahruddin, Heru Subiyantoro, Yolanda
Affiliation: Universitas Borobudur Indonesia; Sahruddin is also affiliated with Universitas Indraprasta PGRI, Indonesia
Journal: International Journal of Finance and Business Management (IJFBM)
Publication Year: 2026
Volume: 4, No. 3
Pages: 213–224
DOI: https://doi.org/10.59890/ijfbm.v4i3.6
Official Journal: https://journalijfbm.my.id/index.php/ijfbm/index
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