The interplay of road infrastructure and regional finance in driving economic growth: Insights from East Kalimantan

Abstract

This study examines the effect of road infrastructure and regional finance on regional economic growth in the recently designated capital city of Indonesia. The empirical data employed in this study originates from ten regencies/cities in East Kalimantan and has been observed from 2013 to 2022. This investigation utilises a moderated mediation model. The analysis tool employs the structural equation partial least squares (PLS) approach, utilising the Warp 8.0 software. Regional finance acts as a full mediator between road infrastructure and regional economic growth. The moderating effect of road infrastructure on this relationship is −0.434, indicating that it significantly reduces the influence of regional finance on regional economic growth. Furthermore, the study identified a threshold between the impact of regional finance on economic growth, which is depicted in the S curve. This study contributes to the existing literature on endogenous economic growth.

Keywords

• Economic growth
• Endogenus theory
• Moderated mediation
• Regional finance
• Road infrastructure