The Implication of Energy Consumption, Corruption, and Foreign Investment for Sustainability of Income Distribution in Indonesia

Abstract

Despite the recent reduction in the poverty rate in Indonesia, income inequality has not shown any improvement. Income inequality, also known as income disparity, has been a prolonged issue in Indonesia and has caused great dissatisfaction among the public. Many of them do not feel an improvement in their wellbeing. Most studies explore these issues based on microeconomics perspectives, and limited studies focus on macroeconomic determinants. Thus, it is imperative to investigate the potential macroeconomic determinants of income inequality in Indonesia, particularly energy consumption (ENC), corruption (COR), foreign direct investment (FDI), and other supporting determinants such as economic growth (GDP), financial development (FD), and CO2 emissions. Data from 1984 to 2020 were collected and analyzed, employing the autoregressive distributed lag (ARDL) approach. The findings indicate that economic growth, corruption, and FDI can contribute to a smaller gap between the rich and the poor. At the same time, greater CO2 emissions can intensify income inequality in Indonesia both in the short and long run. Pollution, as captured by CO2 emissions, can affect the health of the poor. Health problems create difficulties for poor people to work and reduce the probability of earning income, ultimately widening income inequality. FD and energy use, on the other hand, do not influence income distribution in the long and short run. The findings indicate that boosting economic growth and FDI significantly reduce income disparity in Indonesia. Various policy recommendations are suggested in these studies based on the long-run outcomes.

Good Government Governance as a Moderator in Achieving Sustainable Development Goals in Indonesia

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The Grim Cost of Economic Growth and Environmental Degradation: A Comprehensive Panel ARDL Study of Public Debt in the ASEAN-5 Countries

“…Public debt is a well-researched concept in the literature, generally defined as the cumulative amount of debt owed by the government and its affiliated entities [16]. Governments can incur public debt through various means, such as issuing securities, entering into debt agreements, and utilizing financial leases [17].…”

Urbanisation in Indonesia: The Relationship between Income Inequality, Urban Infrastructure, Access to Education, and Population Growth with Social Cohesion, Environmental Resilience, and Housing Quality to look at Urbanisation in Indonesia

“…Concerns concerning the sustainability and resilience of urban settings are also raised by the strain that fast population expansion and unequal access to education are placing on urban infrastructure (Akita & Pirmansah, 2011;Harsono et al, 2023). In the context of Indonesian urbanization, the difficulties of resilience and sustainability in urban areas are examined (Handayani et al, 2022;Harsono et al, 2024). The relationship between unequal development outcomes in Indonesian cities and exclusive capitalist development outcomes in rural areas is also examined in this paper (Aritenang, 2022).…”