Economic Convergence in North Sumatra Province: An Analysis of β-Convergence in Per Capita Income Across Regions KONVERGENSI EKONOMI DI PROVINSI SUMATERA UTARA: ANALISIS β-KONVERGENSI TERHADAP PENDAPATAN PER KAPITA ANTARWILAYAH Section Articles

Abstract

This study aims to examine the process of economic convergence among regencies and cities in North Sumatra Province and to identify the factors influencing this condition during the 2016–2025 period. The research is motivated by persistent development disparities and variations in per capita Gross Regional Domestic Product (GRDP) across regions, indicating uneven economic growth. The analysis employs two approaches: a descriptive analysis using the Klassen Typology to classify regional characteristics, and a quantitative analysis using panel data regression with the Fixed Effects Model (FEM). The dependent variable is per capita GRDP, while the independent variables include lagged per capita GRDP, the Human Development Index (HDI), the Open Unemployment Rate (TPT), and Domestic Direct Investment (PMDN). The Klassen Typology analysis reveals that the majority of regencies and cities in North Sumatra Province fall into the category of relatively lagging regions (Quadrant IV). Meanwhile, the panel data regression results indicate that lagged per capita GRDP has a positive and significant effect on per capita GRDP, suggesting the presence of an economic convergence process in North Sumatra Province. Furthermore, HDI and PMDN investment are shown to have a positive and significant impact on increasing per capita GRDP, whereas the TPT has a negative, albeit statistically insignificant, effect. Based on these findings, local governments need to prioritize improving human resource quality and fostering a more conducive investment environment to accelerate equitable development and economic growth across regions.

Keywords: Economic Convergence, GRDP per Capita, Human Development Index (HDI), Open Unemployment Rate (TPT), Investment, Panel Data Regression, Klassen Typology.