Provincial Real Economic Growth in Indonesia: Investigating Key Factors Through Spatial Analysis

Indonesia's democratic performance is still classified as a 'moderate' and 'flawed democracy' according to the latest report, even though the ongoing progress of national democracy continues to advance every year. This study addresses the issue by offering a more comprehensive perspective and distinguishes itself by employing a decomposition approach that incorporates 25 indicators of the Indonesian democracy index to assess their individual effects on economic growth, which no prior Indonesian study has explored. The study classifies these indicators into six distinct categories: freedom and civil rights issues, discrimination issues, political and electoral issues, social and cultural issues, law and justice issues, and demonstration and community participation issues. The findings reveal that five out of the six categorized indicators have a crucial role and significantly impact economic growth. This evidence suggests that policymakers should prioritize a multifaceted approach, which includes bolstering the protection of civil rights and freedoms, combating discrimination, as well as reforming electoral and political processes. If implemented with transparency and inclusivity, this approach can pave the way for a more robust and prosperous democracy, leading to better and sustainable economic growth in Indonesia.

Section: Demonstration and Community Participation Issuesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Decomposed Impact of Democracy on Indonesia’s Economic Growth

Hardi,

Ringga,

Fijay

et al. 2023

“…The availability of employment opportunities could reduce high levels of unemployment, leading to increased labor absorption and, consequently, a poverty reduction, which improved the economy. As per capita income rose, economic growth increased, leading to decreased poverty levels [31][32][33].…”

Section: Introductionmentioning

confidence: 99%

Analysis of the Influence of Investment and Labor on Poverty Levels Through the Growth of the Indonesian Manufacturing Industry

Balqis,

Syahnur,

Ernawati

2024

Self Cite

This study aims to eradicate poverty by utilizing the manufacturing industrial sector, which cannot be separated from the influence of investment value and labor absorption. The analysis methods used are multiple linear regression and Vector Autoregression (VAR). The study employs quarterly secondary data from 1999 to 2022. The results of the analysis show that labor and investment partially have a significant and positive effect on the growth of the manufacturing industry. Moreover, by using a bivariate causality test, this study proves the existence of a two-way causal relationship between the economic growth of the manufacturing industry and poverty. Additionally, the study also analyzed the response of the independent variable to the dependent variable using Impulse Response (IRF) and Variance Decomposition (VD). It can be concluded that the economic growth of the manufacturing industry responds negatively to poverty, and poverty responds negatively to the economic growth of the manufacturing industry until both reach a balance. The contribution made by each variable in forming the value of that variable is different from one another. The implementation of good governance is highly expected in efforts to eradicate poverty in Indonesia, one of which is through increasing the economic growth of the manufacturing industry and then creating useful programs to increase investment and employment.

“…Limited access to quality education and healthcare exacerbates the cycle of poverty, and the agricultural sector faces issues like low productivity and climate change vulnerability. Additionally, income inequality is widening, as high earners disproportionately benefit from economic growth, leaving many struggling to meet basic needs [4][5][6][7][8][9][10].…”

Section: Introductionmentioning

confidence: 99%

Regional Nexus of Economic Growth, Income Inequality and Poverty

Naufal,

Fikriah

2023

This study divides Aceh Province into three distinct regional to investigate the nexus between economic growth, income inequality, and poverty from 2011-2021. Applying the Granger causality test across 23 districts/cities, this research uncovers the distinct interplay among these pivotal socioeconomic variables. While previous studies have delved into these relationships in various contexts, the unique socio-economic backdrop of Aceh Province commands a targeted empirical exploration. Across the province, our findings indicate a bidirectional causality between economic growth and poverty, elucidating a reciprocal influence where economic dynamics and poverty levels directly affect each other. Additionally, we observe a unidirectional causality from income inequality to economic growth and poverty, demonstrating that income inequality hampers regional economic growth and exacerbates poverty levels. In regional 1, a self-sustaining causal loop is identified, where economic growth leads to changes in poverty, which then feed into income inequality, and subsequently loop back to impact economic growth. In regional 2, a bidirectional causality between economic growth and poverty is found, highlighting a relationship where economic progress alone does not effectively address poverty. Regional 3 presents a distinctive pattern, where income inequality is a precursor to poverty, which then unidirectionally impacts economic growth, suggesting that in this region, strategies to combat inequality could be pivotal in spurring economic development. These varied regional causal patterns signal the need for nuanced and region-specific policy interventions.