IMPACT OF INSTITUTIONAL EFFICIENCY AND OIL PRICES ON ECONOMIC GROWTH IN INDONESIAN

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Sonedi, Chandra Anugrah Putra, Bulkani

Abstract

This article aims at assessing the impact of institutional quality and global oil prices on the manufacturing sector in Indonesia for the period 1996 to 2017.  The institutional quality is calculated by an index of corruption. The Vector Error Correction Model (VEC) Granger causality tests have been involved to analyses the causal links among the variables. The results indicate a significant connection among oil prices, institutional efficiency and the growth of the economy in Indonesia during the study period.  However, the short-term effects aren’t empirically significant. The Granger causality analysis indicates a one-way causal link running from oil prices and institutional quality to economic growth.

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