Determination of Investment Needs to Pursue Growth Targets through Incremental Capital Output Ratio (ICOR)

Suparmono Suparmono


This article aims to analyze the effectiveness of investment as measured by the need for investment to produce output at a certain level, which in turn can determine the regional economic growth target. The analytical tool used is the incremental capital output ratio (ICOR) and the determination of economic growth targets. The ICOR value used in this study was calculated using three calculation approaches, namely Lag0, Lag1, and Lag2 data. The data used in this study is data from the economy of the Special Region of Yogyakarta until 2019. The result is that during the research period, there is a correlation between ICOR and economic growth, meaning that the lower the ICOR value, the value of economic growth will also increase. This shows that the effectiveness and efficiency of investment will result in a positive impact on economic growth.


ICOR; economic growth; investment; regional economy; special economy

Full Text:



Campano, F., Laureti, L., & Salvatore, D. (2017). Capturing the effects of changing capital-intensity on Long-term growth in the major emerging economies. Journal of Policy Modeling, 39(4), 729–740.

Ehigiamusoe, K. U., & Lean, H. H. (2019). Do economic and financial integration stimulate economic growth? A critical survey. Economics, 13, 1–27.

Huggins, R., Izushi, H., Prokop, D., & Thompson, P. (2014). Regional competitiveness, Economic growth and stages of development. Zbornik Radova Ekonomskog Fakulteta u Rijeci : Časopis Za Ekonomsku Teoriju i Praksu, 32(2), 255–283.

Jiang, Y., Jiang, Y., & Zheng, J. (2019). Investment in Infrastructure and Regional Growth in China. Emerging Markets Finance and Trade, 0(0), 1–15.

Mahmud, M. (2008). Incremental Capital Output Ratio: Barometer Efisiensi Perekonomian Nasional. Jurnal Ilmiah Ekonomi Bisnis, 13(1), 5892.

Maradana, R. P., Pradhan, R. P., Dash, S., Zaki, D. B., Gaurav, K., Jayakumar, M., & Sarangi, A. K. (2019). Innovation and economic growth in European Economic Area countries: The Granger causality approach. IIMB Management Review, 31(3), 268–282.

Masloman, I. (2020). Analisa Perhitungan ICOR di Kabupaten Minahasa Tenggara. Jurnal Berkala Ilmiah Efisiensi, 20(02).

Nevyantseva, L., & Vlasova, N. (2021). Comparative Analysis of Methods for Evaluating Efficiency of Regional Investment Policy. In SHS Web of Conferences (Vol. 93). EDP Sciences.

Ru, S., Liu, J., Wang, T., & Wei, G. (2020). Provincial quality of economic growth: Measurements and influencing factors for China. Sustainability (Switzerland), 12(4).

Samoylova, K. N., Myzaev, M. Z., Rykina, S. N., Denisova, I. P., & Takmazyan, A. S. (2020). Regional Investment Policy in The Context of Economic Growth, Employment and Income of the Population. International Journal of Economics & Business Administration (IJEBA), 8(4), 691-699.

Sedova, N. V., & Filatov, A. S. (2020). Improving the Efficiency of Managing Regional Investment Projects. Regionalnaya ekonomika. Yug Rossii, 130-138.

Soumaila, I. (2017). The Determinants of Investment Efficiency in West African Economic and Monetary Union (Waemu). The Journal of Developing Areas, 51(1), 49–61.

Thach, N. N. (2020). Endogenous economic growth: The arrow-romer theory and a test on vietnamese economy. WSEAS Transactions on Business and Economics, 17, 374–386.

Walters, A. A. (1966). Incremental capital-output ratios. The Economic Journal, 76(304), 818-822.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License. ISSN 2541-6790. joomla visitors View My Stats