Abstract

This research aimed to analyze the economic development including its macroeconomic variable in 10 Provinces in Sumatra Island of Indonesia during 2014-2020 by using simultaneous equation model with panel data. The results from Hausman Specification Test showed that the two way relationship between economic development and human development in Sumatra was exist. The government spending and net export had significant and positive impact on economic growth. Household consumption and mean years schooling had significant and positive impact on human development index in Sumatra. In brief, two determinants of economic growth of Sumatra were government spending and net export. Meanwhile, household consumption and mean years schooling had the indirect effect on economic growth.