195 Journal of Economics, Business and Accountancy Ventura Volume 13, No. 3, December 2010, pages 195 – 212 Accreditation No. 110/DIKTI/Kep/2009 INVESTMENT ON THE COMMUNITY INCOME AND THE ECONOMIC GROWTH IN CENTRAL JAVA P. Eko Prasetyo Adnan Suryo Darmono Universitas Negeri Semarang E-mail: prasetyo.dr.eko@gmail.com Kampus Sekaran, Gunung Pati,Semarang 50229 Jawa Tengah,Indonesia ABSTRACT This article attempts to analyze the impact of investment on the community income and the economic growth in Central Java using the social accounting matrix (SAM) framework con- cerning people’s income and economic growth. The data were taken from Central Bureau of Statistics (BPS). Thus, it concerns production factor block, institutional block, and produc- tion sector block. It shows that investment influences the people income and economical growth. People’s income that is most affected is farming business income while that of being less affected is farming worker. The distribution of people’s income is not spread evenly among the group. Furthermore, investment production block has positive impact on the big- gest economic growth, especially on manufacturing industry sectors, except food, electricity, gasses, and drinking water. People’s income condition and economic growth which are in- fluenced by investment proved to have no difference. As such, several factors that support investment atmosphere policy: bureaucracy and licensing, infrastructure, and investment protection from illegal tolls must be given more serious attention. Beside, investment is ex- pected to grow effectively and efficiently. Next, the implication of investment policy as the main generator of economic growth trough production sector has biggest positive impact, especially on financial institution and trade sector, while investment has less impact on in- dustrial and agricultural sectors especially on food crop and food industry. Key words : Investment impact, people income, and economical growth INTRODUCTION It is the fact that investment is an important component in the national income and eco- nomic growth. This can also mean that good economic growth is a reflection of the level of national income. In the process of eco- nomic development, investment expended by the company is the starting point of eco- nomic development activities. Every state and local government tries to create a con- ducing climate to encourage investment, by doing for example private, government or between government and private coopera- tion. When investment is made by the gov- ernment, it may provide services to the community (non-profit oriented). Of course, this type of investment may not be con- ducted by private investors. It can be stated that the realization rate of capital invested is influenced by a number of factors such as interest rate, the level of national income, government policy, expec- tations regarding economic activity in the future, and technological progress. The level of investment can increase production ca- pacity, i.e. when the production sector in- creases, the output will increase as well. In other words, the economy will grow; in multiplier effects in a chain such as it will impact on other sectors including the peo- ple's income. Since the practice of regional autonomy, it has not reached consensus yet on the model of regional autonomy for being effi- cient, well targeted on the basis of Law no. 22, 1999 and Law no. 32 of 2004. Ideally, every process of development, including all in the area based on their own ability (self-