Promoting Economic Transformation Through Strengthening Human Capital: Empirical Evidence from Districts/Cities in Riau Province

Abstract

Purpose:
This study examines the effects of Mean Years of Schooling (MYS), Expected Years of Schooling (EYS), and Life Expectancy at Birth (LEB) on the share of manufacturing sector GRDP in total GRDP at current prices across 12 regencies/cities in Riau Province during 2011–2024.
Methodology:
A balanced panel dataset comprising 168 observations, sourced from official publications of Statistics Indonesia (BPS) Riau Province, was analyzed using panel data regression in EViews. Model selection using the Chow, Hausman, and Lagrange Multiplier tests identified the Random Effects Model (REM) as the most appropriate specification.
Findings:
MYS has a positive and significant effect on the manufacturing share (coefficient = 3.189; p = 0.0018), while EYS (p = 0.3178) and LEB (p = 0.6750) are not statistically significant. The model explains 36.45 percent of the variation in manufacturing share (weighted R²) and is jointly significant (F = 31.351; p < 0.001).
Implication:
The findings suggest that Riau's industrial structure remains heavily shaped by capital-intensive natural-resource sectors, so longer-term human capital accumulation and population health have not yet been fully translated into manufacturing development at the regency/city level. The study recommends integrating vocational education policies with resource-based downstream industrial development to strengthen regional structural transformation.