Analysis of Factors Affecting Economic Growth in the SMEs Sector in Indonesia

ABSTRACT
The role of SMEs has an essential meaning for an area, especially in the expansion of employment and the drivers of
economic growth, including export activities. The purpose of this study was to analyze the effect of SME units, the
value of SME investment, and the value of SME exports on Indonesia's economic growth. This study's analysis model
refers to the basic model of multiple linear regression equations with the Error Correction Model method in estimating
the short-term and long-term relationship between the SME, Investment, and Export variables with GDP in Indonesia.
Error Correction Model (ECM) analysis results on the estimation results using the Error Correction Model method
obtained ECT (Error Correction Term) with a negative sign and significant at α = 5%, then the model is valid to be used.
Because the error correction model is declared valid if the ECT value obtained is significant and has a negative mark,
in model 1 an R2 value of around 0.996 or 99.6% can be said that the types of independent variables entered in the
model are very good, because only 0.4% the diversity of dependent variables that are influenced by independent
variables outside the model and it can be said that in the short and long term the variables used in this study significantly
influence economic growth