BI Institute • Riset

A B S T R A C T
The validity of growth models is debatable, more so in developing than in developed economies. We contribute to this debate by testing the relevance of semi-endogenous growth models in explaining Indonesia's economic growth transformation. Using historical time series data (1968 to 2018), we test growth models from a unique perspective by examining the roles of the Islamic financial market, the conventional financial system, and structural changes. We show that Indonesia's growth experience is best characterized by a semi-endogenous growth model driven by research activity and access to the financial system, particularly the Islamic financial market. We conclude that while linear models fail to support semi-endogenous growth models, nonlinear models do support them.

A R T I C L E I N F O
JEL code:
O3, O4

Keywords:

Economic growth, Productivity, Semi-endogenous growth, Indonesia

Solikin M. Juhroa, Paresh Kumar Narayanb,?, Bernard Njindan Iykeb, Budi Trisnantoa (Bank Indonesia Institute, Bank, Indonesia
b Centre for Financial Econometrics, Deakin Business School, Deakin University, Melbourne, Australia)