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Optimizing Human Capital Capacity To Drive Growth Above 5%

Author

Listed:
  • Yoga Affandi

    (Bank Indonesia)

  • Donni Fajar Anugrah

    (Bank Indonesia)

  • Cicilia Anggadewi Harun

    (Bank Indonesia)

  • Mohammad Marza Naufal

    (Bank Indonesia)

  • Jessica Tasijawa

    (Bank Indonesia)

  • Pandu Kuntoadji

    (Bank Indonesia)

Abstract

This study explores strategies for optimizing human capital to drive Indonesia's economic growth above 5%. Low labor productivity and disparities in education quality between regions are the main obstacles to achieving higher growth. The results of the panel data analysis show that increasing human capital significantly increases economic growth, especially in sectors that require high skills, such as health and manufacturing. Increasing human capital accelerates technological innovation, where skilled workers can adopt and develop new technologies that drive efficiency and competitiveness. On the other hand, there are fundamental problems in the education system, such as frequent curriculum changes, uneven teacher quality, and bullying in schools, which hinder human capital development. In addition, the increase in human capital is still concentrated in Java, while other regions need to catch up in access and quality of education, which causes inequality. Therefore, close collaboration between the government and the private sector is needed to improve the quality of education and ensure the development of human capital evenly across regions so that its impact can be optimized to drive more inclusive and sustainable economic growth.

Suggested Citation

  • Yoga Affandi & Donni Fajar Anugrah & Cicilia Anggadewi Harun & Mohammad Marza Naufal & Jessica Tasijawa & Pandu Kuntoadji, 2024. "Optimizing Human Capital Capacity To Drive Growth Above 5%," Working Papers WP/04/2024, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp042024
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Education and Economic Development; Human Capital; Migration;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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