DOES GOVERNEMNT INTERVENTION MATTERS ON ECONOMIC GROWTH ( CASE STUDY ASEAN COUNTRIES)

Abstract

Subsidies and Governance are a form of government intervention that is thought to influence economic growth. This research was conducted in 11 ASEAN countries during the 2008-2015 period. By using data that has been published by the World Bank, the data is processed using the panel data method. The results of the study indicate that subsidy policies do not significantly affect economic growth, on the contrary the implementation of good governance represented by government effectivity, rule of law, quality of rule and control of corruption variables significantly influence economic growth in ASEAN. Subsidies that are not well targeted and transferred to the unproductive sector will suppress economic growth and must be avoided. Several countries in ASEAN, such as Singapore, Cambodia and Malaysia have removed this policy. It is recommended that more generous subsidies be given to make them more targeted.