Assessing the unemployment rate as a mediator between SMEs and economic growth
Economic growth and unemployment reduction in developing countries can be strengthened by improving the business quality of SMEs. As SMEs dominate Indonesia’s industrial structure, this study examines their relationship with economic growth, with unemployment rates as a moderating variable, in West...
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Master Program in Economics, Graduate Program of Universitas Jambi
2024-12-01
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| Series: | Jurnal Perspektif Pembiayaan dan Pembangunan Daerah |
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| Online Access: | https://online-journal.unja.ac.id/JES/article/view/37800 |
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| author | Malik Cahyadin Heru Irianto Basem Ertimi |
| author_facet | Malik Cahyadin Heru Irianto Basem Ertimi |
| author_sort | Malik Cahyadin |
| collection | DOAJ |
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Economic growth and unemployment reduction in developing countries can be strengthened by improving the business quality of SMEs. As SMEs dominate Indonesia’s industrial structure, this study examines their relationship with economic growth, with unemployment rates as a moderating variable, in West Java, Central Java, and East Java from 2015 to 2022. Using Structural Equation Modeling (SEM) on 96 observations, the findings reveal that the number of SME business units has a significant negative impact on the unemployment rate, whereas total assets have a positive impact. A higher asset value enhances the capacity for modernization and digitalization, which, in turn, reduces labor absorption and potentially increases unemployment. Additionally, a decline in the unemployment rate positively influences economic growth, which is consistent with Okun’s Law, though with a relatively low magnitude. These findings highlight the need for government policies to facilitate SME business development by improving production standards, expanding access to business capital, and enhancing market reach. This approach aligns with the UMKM Naik Kelas (SME Scale-Up) program, which aims to promote sustainable SME growth and economic resilience.
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| format | Article |
| id | doaj-art-72b21bba58e7422db1f5082bb6ae268b |
| institution | Kabale University |
| issn | 2338-4603 2355-8520 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Master Program in Economics, Graduate Program of Universitas Jambi |
| record_format | Article |
| series | Jurnal Perspektif Pembiayaan dan Pembangunan Daerah |
| spelling | doaj-art-72b21bba58e7422db1f5082bb6ae268b2025-01-31T08:36:06ZengMaster Program in Economics, Graduate Program of Universitas JambiJurnal Perspektif Pembiayaan dan Pembangunan Daerah2338-46032355-85202024-12-0112510.22437/ppd.v12i5.37800Assessing the unemployment rate as a mediator between SMEs and economic growthMalik Cahyadin0Heru Irianto1Basem Ertimi2Department of Economics, Faculty of Economics and Business; and PSP-KUMKM, Universitas Sebelas Maret, IndonesiaDepartment of Economics, Faculty of Economics and Business; and PSP-KUMKM, Universitas Sebelas Maret, IndonesiaDepartment of Economics, Faculty of Economics, Zawia University, Libya Economic growth and unemployment reduction in developing countries can be strengthened by improving the business quality of SMEs. As SMEs dominate Indonesia’s industrial structure, this study examines their relationship with economic growth, with unemployment rates as a moderating variable, in West Java, Central Java, and East Java from 2015 to 2022. Using Structural Equation Modeling (SEM) on 96 observations, the findings reveal that the number of SME business units has a significant negative impact on the unemployment rate, whereas total assets have a positive impact. A higher asset value enhances the capacity for modernization and digitalization, which, in turn, reduces labor absorption and potentially increases unemployment. Additionally, a decline in the unemployment rate positively influences economic growth, which is consistent with Okun’s Law, though with a relatively low magnitude. These findings highlight the need for government policies to facilitate SME business development by improving production standards, expanding access to business capital, and enhancing market reach. This approach aligns with the UMKM Naik Kelas (SME Scale-Up) program, which aims to promote sustainable SME growth and economic resilience. https://online-journal.unja.ac.id/JES/article/view/37800Economic growthSEMSMEsUnemployment |
| spellingShingle | Malik Cahyadin Heru Irianto Basem Ertimi Assessing the unemployment rate as a mediator between SMEs and economic growth Jurnal Perspektif Pembiayaan dan Pembangunan Daerah Economic growth SEM SMEs Unemployment |
| title | Assessing the unemployment rate as a mediator between SMEs and economic growth |
| title_full | Assessing the unemployment rate as a mediator between SMEs and economic growth |
| title_fullStr | Assessing the unemployment rate as a mediator between SMEs and economic growth |
| title_full_unstemmed | Assessing the unemployment rate as a mediator between SMEs and economic growth |
| title_short | Assessing the unemployment rate as a mediator between SMEs and economic growth |
| title_sort | assessing the unemployment rate as a mediator between smes and economic growth |
| topic | Economic growth SEM SMEs Unemployment |
| url | https://online-journal.unja.ac.id/JES/article/view/37800 |
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