Determinants of Green Total Factor Productivity in Indonesia: The Role of Environment in Economic Development with A Parametric Approach
Article Sidebar
Accepted
20 January 2024
Published
5 August 2024
Keywords:
-
This article analyzes the role of technology that provides the carrying capacity of the environment in efforts to increase economic development.
Abstract
Environmental degradation occurs during economic development. Green Total Factor Productivity (TFP) was developed by incorporating environmental variables into traditional TFP to measure the efficiency of using technology to produce output, while balancing environmental quality. This study aims to determine the general description of economic development in Indonesia in 2015–2021, estimate economic development, and calculate Green TFP in Indonesia in 2015–2021, know the general description of Green TFP, and the variables that are thought to influence Green TFP in Indonesia in 2015–2021. 2021 and analyzed the variables influencing Green TFP in Indonesia in 2015–2021. The estimation results of the economic growth model showed a trade-off between economic growth and environmental quality in Indonesia. The Green TFP results for provinces in Indonesia are obtained using the Cobb-Douglas production function and panel data regression. The value of Green TFP in Indonesia is stagnant, at approximately 0.002. The analysis of variables
affecting Green TFP using panel data regression shows that HDI, government spending on education, electricity consumption, industry share, capital structure, and trade openness have significant effects on Green TFP.
References
Acheampong, A. O., & Opoku, E. E. O. (2023). Environmental degradation and economic growth: Investigating linkages and potential pathways. Energy Economics, 123. https://doi.org/10.1016/j.eneco.2023.106734
Chou, Y.-C., Hao-Chun Chuang, H., & Shao, B. B. M. (2014). The impacts of information technology on total factor productivity: A look at externalities and innovations. International Journal of Production Economics, 158, 290–299. https://doi.org/10.1016/j.ijpe.2014.08.003
Comin, D. (2010). Total factor productivity. In Economic Growth (pp. 260–263). Palgrave Macmillan UK. https://doi.org/10.1057/9780230280823_32
Dejenie, T., & Kakiso, T. (2023). Development and environmental policies of Ethiopia: Policy review from view point of development-environment sustainability linkage. Heliyon, 9(6). https://doi.org/10.1016/j.heliyon.2023.e16608
Ding, L., Wu, M., Jiao, Z., & Nie, Y. (2022). The positive role of trade openness in industrial green total factor productivity—provincial evidence from China. Environmental Science and Pollution Research, 29(5), 6538–6551. https://doi.org/10.1007/s11356-021-16164-8
Jimeno-Morenilla, A., Azariadis, P., Molina-Carmona, R., Kyratzi, S., & Moulianitis, V. (2021). Technology enablers for the implementation of Industry 4.0 to traditional manufacturing sectors: A review. Computers in Industry, 125. https://doi.org/10.1016/j.compind.2020.103390
Li, T., Han, D., Ding, Y., & Shi, Z. (2020). How Does the Development of the Internet Affect Green Total Factor Productivity? Evidence from China. IEEE Access, 8, 216477–216490. https://doi.org/10.1109/ACCESS.2020.3041511
Li, Z., Leong, L. W., N Aldoseri, M. M., Muda, I., Abu-Rumman, A., & Al Shraah, A. (2023). Examining the role of sustainability and natural resources management in improving environmental quality: Evidence from Asian countries. Resources Policy, 80. https://doi.org/10.1016/j.resourpol.2022.103136
Mao, J., Wu, Q., Zhu, M., & Lu, C. (2022). Effects of Environmental Regulation on Green Total Factor Productivity: An Evidence from the Yellow River Basin, China. Sustainability, 14(4), 2015. https://doi.org/10.3390/su14042015
Nguyen, T. T. H., Tu, Y.-T., Diep, G. L., Tran, T. K., Tien, N. H., & Chien, F. (2023). Impact of natural resources extraction and energy consumption on the environmental sustainability in ASEAN countries. Resources Policy, 85, 103713. https://doi.org/10.1016/j.resourpol.2023.103713
Olomola, P. A., & Osinubi, T. T. (2018). Determinants of Total Factor Productivity in Mexico, Indonesia, Nigeria, and Turkey (1980–2014). Emerging Economy Studies, 4(2), 192–217. https://doi.org/10.1177/2394901518795072
Pindyck, R. S., & Rubinfeld, D. L. (2013). Microeconomics Eight Edition. Pearson Education, Inc.
Rusiawan, W., Tjiptoherijanto, P., Suganda, E., & Darmajanti, L. (2015). Assessment of Green Total Factor Productivity Impact on Sustainable Indonesia Productivity Growth. Procedia Environmental Sciences, 28(SustaiN 2014), 493–501. https://doi.org/10.1016/j.proenv.2015.07.059
Singh, S., Deep Sharma, G., Radulescu, M., Balsalobre-Lorente, D., & Bansal, P. (2023). Do natural resources impact economic growth: An investigation of P5 + 1 countries under sustainable management. Geoscience Frontiers. https://doi.org/10.1016/j.gsf.2023.101595
Tao, F., Li, L., & Xia, X. H. (2012). Industry Efficiency and Total Factor Productivity Growth under Resources and Environmental Constraint in China. The Scientific World Journal, 2012, 1–10. https://doi.org/10.1100/2012/310407
Todaro, M. P. (2000). Pembangunan Ekonomi. Bumi Aksara.
Wang, F., Wu, J., Wu, M., Zheng, W., & Huang, D. (2021). Has the Economic Structure Optimization in China’s Supply-Side Structural Reform Improved the Inclusive Green Total Factor Productivity? Sustainability, 13(22), 12911. https://doi.org/10.3390/su132212911
Wang, H., Cui, H., & Zhao, Q. (2021). Effect of green technology innovation on green total factor productivity in China: Evidence from spatial durbin model analysis. Journal of Cleaner Production, 288, 125624. https://doi.org/10.1016/j.jclepro.2020.125624
Xepapadeas, A., Tzouvelekas, V., & Vouvaki, D. (2007). Total Factor Productivity Growth and the Environment: A Case for Green Growth Accounting. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.981133
Yi, Y., Geng, Y., & Yang, M. (2023). Has China-ASEAN Trade opening increased China’s carbon emissions? Chinese Journal of Population Resources and Environment, 21(2), 52–59. https://doi.org/10.1016/j.cjpre.2023.06.002
Zhang, D., Mohsin, M., Rasheed, A. K., Chang, Y., & Taghizadeh-Hesary, F. (2021). Public spending and green economic growth in BRI region: Mediating role of green finance. Energy Policy, 153. https://doi.org/10.1016/j.enpol.2021.112256
Zhang, R., Aljumah, A. I., Ghardallou, W., Li, Z., Li, J., & Cifuentes-Faura, J. (2023). How economic development promotes the sustainability targets? Role of natural resources utilization. Resources Policy, 85, 103998. https://doi.org/10.1016/j.resourpol.2023.103998
Chou, Y.-C., Hao-Chun Chuang, H., & Shao, B. B. M. (2014). The impacts of information technology on total factor productivity: A look at externalities and innovations. International Journal of Production Economics, 158, 290–299. https://doi.org/10.1016/j.ijpe.2014.08.003
Comin, D. (2010). Total factor productivity. In Economic Growth (pp. 260–263). Palgrave Macmillan UK. https://doi.org/10.1057/9780230280823_32
Dejenie, T., & Kakiso, T. (2023). Development and environmental policies of Ethiopia: Policy review from view point of development-environment sustainability linkage. Heliyon, 9(6). https://doi.org/10.1016/j.heliyon.2023.e16608
Ding, L., Wu, M., Jiao, Z., & Nie, Y. (2022). The positive role of trade openness in industrial green total factor productivity—provincial evidence from China. Environmental Science and Pollution Research, 29(5), 6538–6551. https://doi.org/10.1007/s11356-021-16164-8
Jimeno-Morenilla, A., Azariadis, P., Molina-Carmona, R., Kyratzi, S., & Moulianitis, V. (2021). Technology enablers for the implementation of Industry 4.0 to traditional manufacturing sectors: A review. Computers in Industry, 125. https://doi.org/10.1016/j.compind.2020.103390
Li, T., Han, D., Ding, Y., & Shi, Z. (2020). How Does the Development of the Internet Affect Green Total Factor Productivity? Evidence from China. IEEE Access, 8, 216477–216490. https://doi.org/10.1109/ACCESS.2020.3041511
Li, Z., Leong, L. W., N Aldoseri, M. M., Muda, I., Abu-Rumman, A., & Al Shraah, A. (2023). Examining the role of sustainability and natural resources management in improving environmental quality: Evidence from Asian countries. Resources Policy, 80. https://doi.org/10.1016/j.resourpol.2022.103136
Mao, J., Wu, Q., Zhu, M., & Lu, C. (2022). Effects of Environmental Regulation on Green Total Factor Productivity: An Evidence from the Yellow River Basin, China. Sustainability, 14(4), 2015. https://doi.org/10.3390/su14042015
Nguyen, T. T. H., Tu, Y.-T., Diep, G. L., Tran, T. K., Tien, N. H., & Chien, F. (2023). Impact of natural resources extraction and energy consumption on the environmental sustainability in ASEAN countries. Resources Policy, 85, 103713. https://doi.org/10.1016/j.resourpol.2023.103713
Olomola, P. A., & Osinubi, T. T. (2018). Determinants of Total Factor Productivity in Mexico, Indonesia, Nigeria, and Turkey (1980–2014). Emerging Economy Studies, 4(2), 192–217. https://doi.org/10.1177/2394901518795072
Pindyck, R. S., & Rubinfeld, D. L. (2013). Microeconomics Eight Edition. Pearson Education, Inc.
Rusiawan, W., Tjiptoherijanto, P., Suganda, E., & Darmajanti, L. (2015). Assessment of Green Total Factor Productivity Impact on Sustainable Indonesia Productivity Growth. Procedia Environmental Sciences, 28(SustaiN 2014), 493–501. https://doi.org/10.1016/j.proenv.2015.07.059
Singh, S., Deep Sharma, G., Radulescu, M., Balsalobre-Lorente, D., & Bansal, P. (2023). Do natural resources impact economic growth: An investigation of P5 + 1 countries under sustainable management. Geoscience Frontiers. https://doi.org/10.1016/j.gsf.2023.101595
Tao, F., Li, L., & Xia, X. H. (2012). Industry Efficiency and Total Factor Productivity Growth under Resources and Environmental Constraint in China. The Scientific World Journal, 2012, 1–10. https://doi.org/10.1100/2012/310407
Todaro, M. P. (2000). Pembangunan Ekonomi. Bumi Aksara.
Wang, F., Wu, J., Wu, M., Zheng, W., & Huang, D. (2021). Has the Economic Structure Optimization in China’s Supply-Side Structural Reform Improved the Inclusive Green Total Factor Productivity? Sustainability, 13(22), 12911. https://doi.org/10.3390/su132212911
Wang, H., Cui, H., & Zhao, Q. (2021). Effect of green technology innovation on green total factor productivity in China: Evidence from spatial durbin model analysis. Journal of Cleaner Production, 288, 125624. https://doi.org/10.1016/j.jclepro.2020.125624
Xepapadeas, A., Tzouvelekas, V., & Vouvaki, D. (2007). Total Factor Productivity Growth and the Environment: A Case for Green Growth Accounting. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.981133
Yi, Y., Geng, Y., & Yang, M. (2023). Has China-ASEAN Trade opening increased China’s carbon emissions? Chinese Journal of Population Resources and Environment, 21(2), 52–59. https://doi.org/10.1016/j.cjpre.2023.06.002
Zhang, D., Mohsin, M., Rasheed, A. K., Chang, Y., & Taghizadeh-Hesary, F. (2021). Public spending and green economic growth in BRI region: Mediating role of green finance. Energy Policy, 153. https://doi.org/10.1016/j.enpol.2021.112256
Zhang, R., Aljumah, A. I., Ghardallou, W., Li, Z., Li, J., & Cifuentes-Faura, J. (2023). How economic development promotes the sustainability targets? Role of natural resources utilization. Resources Policy, 85, 103998. https://doi.org/10.1016/j.resourpol.2023.103998
Authors
PradianaB. and WahyuniK. T. (2024) “Determinants of Green Total Factor Productivity in Indonesia: The Role of Environment in Economic Development with A Parametric Approach”, Jurnal Pengelolaan Sumberdaya Alam dan Lingkungan (Journal of Natural Resources and Environmental Management). Bogor, ID, 14(3), p. 545. doi: 10.29244/jpsl.14.3.545.
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
