International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
line decor
  
line decor

 Volume 11, Issue 3 (March 2024), Pages: 238-250

----------------------------------------------

 Original Research Paper

Impact of economic growth, village funds, and poverty on human development in Indonesia: An analytical study from 2015 to 2022

 Author(s): 

 Rosdiana Sijabat *

 Affiliation(s):

 Department of Business Administration, Atma Jaya Catholic University of Indonesia, South Jakarta, Indonesia

 Full text

  Full Text - PDF

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-6166-675X

 Digital Object Identifier (DOI)

 https://doi.org/10.21833/ijaas.2024.03.023

 Abstract

This study evaluates how a country's development of human resources, an important measure of economic and policy progress, is affected by various factors. It focuses on the impact of Gross Regional Domestic Product (GRDP), village funds, and poverty levels on the Human Development Index (HDI) across 33 provinces in Indonesia from 2015 to 2022. The aim is to enhance understanding of how promoting human development goes beyond just economic growth, highlighting the importance of addressing poverty and empowering local communities through measures like the Village Fund. By employing panel regression methods, including both static (POLS, FEM, and REM) and dynamic (FMOLS and DOLS) approaches, the study examines the influence of economic growth, village funds, and poverty on human development. The findings from static panel analysis indicate that while economic growth has a negative and significant effect on HDI, village funds positively and significantly influence it. As expected, poverty significantly and negatively affects HDI. Dynamic panel data confirms the positive and significant effect of village funds on HDI and, consistent with static analysis, shows poverty's negative impact. The implications of this research are threefold: First, it suggests that economic expansion might negatively affect HDI. Second, it highlights the importance of village funds in developing human resources, underscoring their role in provincial development financing strategies. Third, it recommends that provincial policymakers focus on reducing poverty to prevent it from hindering human development.

 © 2024 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Human development index, Economic growth, Village funds, Poverty levels, Indonesia

 Article history

 Received 4 November 2023, Received in revised form 5 March 2024, Accepted 10 March 2024

 Acknowledgment 

The author gratefully acknowledges the support of the Department of Business Administration at Atma Jaya Catholic University in Indonesia.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Sijabat R (2024). Impact of economic growth, village funds, and poverty on human development in Indonesia: An analytical study from 2015 to 2022. International Journal of Advanced and Applied Sciences, 11(3): 238-250

 Permanent Link to this page

 Figures

 No Figure

 Tables

 Table 1 Table 2 Table 3 Table 4

----------------------------------------------   

 References (73)

  1. Abdulrahman IA (2022). Measuring the impact of human resource development on poverty incidence in Nigeria: A bound testing approach. Economics and Culture, 19(2): 81-96. https://doi.org/10.2478/jec-2022-0018   [Google Scholar]
  2. Almutairi NT (2023). Does investment in human capital via education stimulate economic growth in an oil-rich country? A case study of Saudi Arabia. Journal of the Knowledge Economy. https://doi.org/10.1007/s13132-023-01265-1   [Google Scholar]
  3. Angin SP, Lubis I, Tanjung AA, and Yahya A (2023). Analysis of village funds and gross regional domestic product impacts on regional/municipal human development index in Nanggroe Aceh Darussalam Province. Riwayat: Educational Journal of History and Humanities, 6(2): 291-295. https://doi.org/10.24815/jr.v6i2.29581   [Google Scholar]
  4. Anowor OF, Ichoku HE, Onodugo VA, Ochinanwata C, and Uzomba PC (2023). Does investment in education and health impact youth employment outcomes? Evidence from Sub-Saharan Africa. Cogent Economics and Finance, 11(1): 2160128. https://doi.org/10.1080/23322039.2022.2160128   [Google Scholar]
  5. Aprilia O and Cerya E (2023). Pengaruh angka partisipasi sekolah (APS) dan kemiskinan terhadap indeks pembangunan manusia (IPM) pada kabupaten di provinsi Sumatera Barat. Jurnal Salingka Nagari, 2(1): 367-380. https://doi.org/10.29103/jeru.v6i3.15178   [Google Scholar]
  6. Asadullah MN, Mansor N, and Savoia A (2021). Understanding a “development miracle”: Poverty reduction and human development in Malaysia since the 1970s. Journal of Human Development and Capabilities, 22(4): 551-576. https://doi.org/10.1080/19452829.2021.1975664   [Google Scholar]
  7. Asante G (2022). The effects of cost elimination on secondary school enrolment in Sub-Saharan Africa. Educational Review, 76(3): 561-585. https://doi.org/10.1080/00131911.2022.2028732   [Google Scholar]
  8. Badrudin R, Dewanti BA, and Siregar B (2021). Are village funds effective in improving social welfare in East Indonesia? Studies of Applied Economics, 39: 4. https://doi.org/10.25115/eea.v39i4.4876   [Google Scholar]
  9. Baltagi B (2021). Econometric analysis of panel data: Springer texts in business and economics. 6th Edition, Springer, Berlin, Germany. https://doi.org/10.1007/978-3-030-53953-5   [Google Scholar] PMCid:PMC8224528
  10. Bloom DE, Khoury A, Kufenko V, and Prettner K (2021). Spurring economic growth through human development: Research results and guidance for policymakers. Population and Development Review, 47(2): 377-409. https://doi.org/10.1111/padr.12389   [Google Scholar]
  11. Cahyo BD, Setyowati AS, and Prabowo A (2022). Pearson correlation between education level and population growth on poverty in central Java, 2019-2021. International Journal of Business, Economics, and Social Development, 3(4): 174-180. https://doi.org/10.46336/ijbesd.v3i4.349   [Google Scholar]
  12. Chattopadhyay M, Kumar A, Ali S, and Mitra SK (2022). Human development and tourism growth’s relationship across countries: A panel threshold analysis. Journal of Sustainable Tourism, 30(6): 1384-1402. https://doi.org/10.1080/09669582.2021.1949017   [Google Scholar]
  13. Chikalipah S and Makina D (2019). Economic growth and human development: Evidence from Zambia. Sustainable Development, 27(6): 1023-1033. https://doi.org/10.1002/sd.1953   [Google Scholar]
  14. Diba AFO, Fathorrazi M, and Somaji RP (2018). Pengaruh kemiskinan, PDRB, dan PAD terhadap indeks pembangunan manusia di jawa timur. Jurnal Ekonomi Ekuilibrium, 2(1): 10-19.   [Google Scholar]
  15. Dita PIGE and Mahaendra YIN (2020). The effect of village fund, PAD, and education on economic growth and poverty level of district/city in Bali province, Indonesia. Russian Journal of Agricultural and Socio-Economic Sciences, 10(106): 24-39. https://doi.org/10.18551/rjoas.2020-10.04   [Google Scholar]
  16. Fahmi A and Dalimunthe KA (2018). Pengaruh good governance, belanja fungsi pendidikan dan kesehatan, dan pdrb perkapita terhadap IPM. Jurnal Manajemen Keuangan Publik, 2(1): 23-34. https://doi.org/10.31092/jmkp.v2i1.285   [Google Scholar]
  17. Fan Q, Goetz SJ, and Liang J (2016). The interactive effects of human capital and quality of life on economic growth. Applied Economics, 48(53): 5186-5200. https://doi.org/10.1080/00036846.2016.1173180   [Google Scholar]
  18. Fosu AK (2007). Poverty and development. Bulletin of the World Health Organization, 85: 734-734.   [Google Scholar]
  19. Gachie W (2020). Higher education institutions, private sector and government collaboration for innovation within the framework of the Triple Helix model. African Journal of Science, Technology, Innovation and Development, 12(2): 203-215. https://doi.org/10.1080/20421338.2019.1631120   [Google Scholar]
  20. Glawe L and Wagner H (2020). The role of institutional quality and human capital for economic growth across Chinese provinces: A dynamic panel data approach. Journal of Chinese Economic and Business Studies, 18(3): 209-227. https://doi.org/10.1080/14765284.2020.1755140   [Google Scholar]
  21. Gujarati DN (2004). Basic econometrics. 4th Edition, Gary Burke, New York, USA.   [Google Scholar]
  22. Haini H (2019). Internet penetration, human capital and economic growth in the ASEAN economies: Evidence from a translog production function. Applied Economics Letters, 26(21): 1774-1778. https://doi.org/10.1080/13504851.2019.1597250   [Google Scholar]
  23. Hartojo N, Ikhsan M, Dartanto T, and Sumarto S (2022). A growing light in the lagging region in Indonesia: The impact of village fund on rural economic growth. Economies, 10(9): 217. https://doi.org/10.3390/economies10090217   [Google Scholar]
  24. Hasanah N, Bahri S, and Fitriyani N (2021). The effect of human development index on poverty model in Indonesia using penalized basis spline nonparametric regression. IOP Conference Series: Materials Science and Engineering, 1115(1): 012055. https://doi.org/10.1088/1757-899X/1115/1/012055   [Google Scholar]
  25. Hidayat S and Woyanti N (2021). Pengaruh pdrb per kapita, belanja daerah, rasio ketergantungan, kemiskinan, dan teknologi terhadap IPM di Indonesia. Jurnal Ekonomi, Bisnis, dan Akuntansi, 23(4): 122-137.   [Google Scholar]
  26. Hsiao C (2007). Panel data analysis: Advantages and challenges. Test, 16: 1-22. https://doi.org/10.1007/s11749-007-0046-x   [Google Scholar]
  27. Hung NT and Thanh SD (2022). Fiscal decentralization, economic growth, and human development: Empirical evidence. Cogent Economics and Finance, 10(1): 2109279. https://doi.org/10.1080/23322039.2022.2109279   [Google Scholar]
  28. Islam MS and Alam F (2023). Influence of human capital formation on the economic growth in Bangladesh during 1990–2019: An ARDL approach. Journal of the Knowledge Economy, 14(3): 3010-3027. https://doi.org/10.1007/s13132-022-00998-9   [Google Scholar]
  29. Islam MS and Shindaini AJM (2022). Impact of institutional quality and human capital creation on economic growth in Bangladesh: Evidence from an ARDL approach. International Journal of Social Economics, 49(12): 1787-1802. https://doi.org/10.1108/IJSE-12-2021-0732   [Google Scholar]
  30. Ito H, Sekiguchi R, and Yamawake T (2018). Debt swaps for financing education: Exploration of new funding resources. Cogent Economics and Finance, 6(1): 1563025. https://doi.org/10.1080/23322039.2018.1563025   [Google Scholar]
  31. Izzah CI and Hendarti IM (2021). Analisis pengaruh tenaga kerja, tingkat upah, dan pdrb terhadap indeks pembangunan manusia (IPM) di provinsi Jawa Tengah. Jurnal Kajian Pendidikan Ekonomi Dan Ilmu Ekonomi, 5(2): 99-106.   [Google Scholar]
  32. Joetarto B, Setiawan A, and Farida F (2020). The impact of village fund program on improving well-being. Journal of Economics and Policy, 13(2): 345-366. https://doi.org/10.15294/jejak.v13i2.24395   [Google Scholar]
  33. Karwahningrum LF and Triyanto E (2021). The effect of regional original income, balanced funds, capital expenditure, and human development index on economic growth. Berkala Akuntansi dan Keuangan Indonesia, 6(2): 166-187. https://doi.org/10.20473/baki.v6i2.25700   [Google Scholar]
  34. Khan NH, Ju Y, and Hassan ST (2018). Modeling the impact of economic growth and terrorism on the human development index: Collecting evidence from Pakistan. Environmental Science and Pollution Research, 25: 34661-34673. https://doi.org/10.1007/s11356-018-3275-5   [Google Scholar] PMid:30324364
  35. Ladi T, Mahmoudpour A, and Sharifi A (2021). Assessing impacts of the water poverty index components on the human development index in Iran. Habitat International, 113: 102375. https://doi.org/10.1016/j.habitatint.2021.102375   [Google Scholar]
  36. Li P, Li X, and Yuan G (2023). Cross-regional allocation of human capital and sustainable development of China’s regional economy: Based on the perspective of population mobility. Sustainability, 15(12): 9807. https://doi.org/10.3390/su15129807   [Google Scholar]
  37. Machmud S and Sidharta I (2023). The relationship between regional development, human development and poverty: A perspective from the Indonesian province. Nurture, 17(3): 157-165. https://doi.org/10.55951/nurture.v17i3.283   [Google Scholar]
  38. Manurung ET, Maratno SF, Permatasari P, Rahman AB, Qisthi R, and Manurung EM (2022). Do village allocation funds contribute towards alleviating hunger among the local community (SDG#2)? An insight from Indonesia. Economies, 10(7): 155. https://doi.org/10.3390/economies10070155   [Google Scholar]
  39. Marpaung Y, Rotinsulu DC, and Rorong IPF (2020). Analisis dampak penggunaan dana desa terhadap perekonomian masyarakat di kecamatan ratatotok kabupaten minahasa Tenggara. Jurnal Pembangunan Ekonomi dan Keuangan Daerah, 21(2): 76-93.   [Google Scholar]
  40. Matarirano O, Panicker M, Atoliyah C, and Mangisa Z (2020). Factors impacting academic performance of first-year accountancy students at Walter Sisulu University. Africa Education Review, 17(1): 83-99. https://doi.org/10.1080/18146627.2018.1477514   [Google Scholar]
  41. Maulana R, Pitoyo AJ, and Alfana MAF (2022). Analisis pengaruh kemiskinan dan kondisi ekonomi terhadap indeks pembangunan manusia di provinsi Jawa Tengah Tahun 2013-2017. Media Komunikasi Geografi, 23(1): 12-24. https://doi.org/10.23887/mkg.v23i1.39301   [Google Scholar]
  42. Moyo C, Mishi S, and Ncwadi R (2022). Human capital development, poverty and income inequality in the Eastern Cape Province. Development Studies Research, 9(1): 36-47. https://doi.org/10.1080/21665095.2022.2032236   [Google Scholar]
  43. Mu J, Yan L, and Wu S (2023). Growing with inequality: A DSGE model with heterogeneous human capital and endogenous economic growth. Applied Economics, 55(32): 3689-3715. https://doi.org/10.1080/00036846.2022.2117778   [Google Scholar]
  44. Muhtar EA, Abdillah A, Widianingsih I, and Adikancana QM (2023). Smart villages, rural development and community vulnerability in Indonesia: A bibliometric analysis. Cogent Social Sciences, 9(1): 2219118. https://doi.org/10.1080/23311886.2023.2219118   [Google Scholar]
  45. Nawawi A, Jaya WK, Sumanto M, and Pangaribowo EH (2021). The impact of fiscal policy on welfare improvement in Indonesia: Study of impact of premium assistance beneficiaries on the national health insurance, physical special allocation fund for health sector, education sector, and village funds to human development index. Populasi, 29(2): 46-64. https://doi.org/10.22146/jp.71691   [Google Scholar]
  46. Novita DNKT and Mahaendra YIN (2021). Analysis of village funds and quality of human resources on the poverty levels and community welfare in the regency/city of Bali province, Indonesia. Russian Journal of Agricultural and Socio-Economic Sciences, 7(115): 100-108. https://doi.org/10.18551/rjoas.2021-07.10   [Google Scholar]
  47. Nugraeni AR and Aji TS (2021). Pengaruh kemiskinan, pertumbuhan ekonomi, dan rasio ketergantungan terhadap indeks pembangunan manusia di Jawa timur. Independent: Journal of Economics, 1(2): 1-15.   [Google Scholar]
  48. Nurvita D, Rohima S, Bashir A, and Mardalena M (2022). The role of public spending on education, health, and economic growth toward human development index in the local economy. Sriwijaya International Journal of Dynamic Economics and Business, 6(2): 197-210. https://doi.org/10.29259/sijdeb.v6i2.197-210   [Google Scholar]
  49. Olawole O and Abiodun K (2021). The political economy of poverty: Lack of political will or poor economic policy in Africa (a case study of Nigeria). The Journal of Social, Political, and Economic Studies, 46(1/2): 95-115.   [Google Scholar]
  50. Oyinlola MA and Adedeji AA (2020). Enhancing economic growth impact of financial development and human capital through capital flows in Sub-Saharan Africa. Journal of Economic Development, 45(2): 95-114.   [Google Scholar]
  51. Ozturk S and Suluk S (2020). The Granger causality relationship between human development and economic growth: The case of Norway. International Journal of Research in Business and Social Science (2147-4478), 9(6): 143-153. https://doi.org/10.20525/ijrbs.v9i6.902   [Google Scholar]
  52. Pandiangan AG, Priyarsono DS, and Probokawuryan M (2021). Pengaruh dana desa terhadap kesenjangan indeks pembangunan manusia wilayah desa kota di Indonesia: Institut pertanian Bogor. Jurnal Ekonomi dan Kebijakan Pembangunan, 10(2): 134-153. https://doi.org/10.29244/jekp.10.2.2021.134-153   [Google Scholar]
  53. Pekarcikova K and Pracharova L (2023). Correlation between human development index and economic growth of major oil and gas producers. GeoScience Engineering, 69(1): 105-120. https://doi.org/10.35180/gse-2023-0092   [Google Scholar]
  54. Permatasari P, Ilman AS, Tilt CA, Lestari D, Islam S, Tenrini RH, and Wardhana IW (2021). The village fund program in Indonesia: Measuring the effectiveness and alignment to sustainable development goals. Sustainability, 13(21): 12294. https://doi.org/10.3390/su132112294   [Google Scholar]
  55. Pitaloka MD and Prabowo PS (2022). Pengaruh pertumbuhan ekonomi dan kemiskinan terhadap IPM 14 kabupaten kategori “sedang” di provinsi Jawa timur. Jurnal Akuntansi Dan Ekonomi, 7(2): 1-12. https://doi.org/10.29407/jae.v7i2.17692   [Google Scholar]
  56. Pugno M (2019). Happiness, human development, and economic (de) growth. Annali Della Fondazione Luigi Einaudi, 53: 151-171.   [Google Scholar]
  57. Rammohan A and Tohari A (2023). Rural poverty and labour force participation: Evidence from Indonesia’s village fund program. PLOS ONE, 18(6): e0283041. https://doi.org/10.1371/journal.pone.0283041   [Google Scholar] PMid:37343023 PMCid:PMC10284375
  58. Reyes GE and Useche AJ (2019). Competitiveness, economic growth and human development in Latin American and Caribbean countries 2006-2015: A performance and correlation analysis. Competitiveness Review: An International Business Journal, 29(2): 139-159. https://doi.org/10.1108/CR-11-2017-0085   [Google Scholar]
  59. Rimawan M, Alwi A, Ismunandar I, and Aryani F (2020). Village fund allocation on economic growth, human development index and poverty. Advances in Social Science, Education and Humanities Research, 465: 338-342. https://doi.org/10.2991/assehr.k.200827.085   [Google Scholar]
  60. Saragi NB, Muluk MK, and Sentanu IGEPS (2021). Indonesia’s village fund program: Does it contribute to poverty reduction? Jurnal Bina Praja: Journal of Home Affairs Governance, 13(1): 65-80. https://doi.org/10.21787/jpb.13.2021.65-80   [Google Scholar]
  61. Senewe J, Rotinsulu DC, and Lapian AL (2021). Analysis of the effect of provery levels, government expenditures, and economic growth on the human development index in South Minahasa Regency. Jurnal Riset Ekonomi, Manajemen, Bisnis dan Akuntansi, 9(3): 173-183.   [Google Scholar]
  62. Sofilda E, Zilal Hamzah M, and Kusairi S (2023). Analysis of fiscal decentralisation, human development, and regional economic growth in Indonesia. Cogent Economics and Finance, 11(1): 2220520. https://doi.org/10.1080/23322039.2023.2220520   [Google Scholar]
  63. Sotarauta M and Grillitsch M (2023). Studying human agency in regional development. Regional Studies, 57(8): 1409-1414. https://doi.org/10.1080/00343404.2023.2217224   [Google Scholar]
  64. Suryahadi A and Al Izzati R (2018). Cards for the poor and funds for Villages: Jokowi’s initiatives to reduce poverty and inequality. Journal of Southeast Asian Economies, 35(2): 200-222. https://doi.org/10.1355/ae35-2f   [Google Scholar]
  65. Sušnik J and van der Zaag P (2017). Correlation and causation between the UN human development index and national and personal wealth and resource exploitation. Economic Research, 30(1): 1705-1723. https://doi.org/10.1080/1331677X.2017.1383175   [Google Scholar]
  66. Syofya H (2018). Effect of poverty and economic growth on Indonesia human development index. Jurnal Ilmiah Universitas Batanghari Jambi, 18(2): 416-423. https://doi.org/10.33087/jiubj.v18i2.486   [Google Scholar]
  67. Telch F and Appe S (2022). How can countries improve human development? Four distinct national planning strategies and the challenges for human development ahead. Development Policy Review, 40(2): e12561. https://doi.org/10.1111/dpr.12561   [Google Scholar]
  68. Uddin MA, Ali MH, and Masih M (2021). Institutions, human capital and economic growth in developing countries. Studies in Economics and Finance, 38(2): 361-383. https://doi.org/10.1108/SEF-10-2019-0407   [Google Scholar]
  69. UNDP (2022). Uncertain times, unsettled lives: Shaping our future in a transforming world. Human Development Report 2021/2022, United Nations Development Programme, New York, USA.   [Google Scholar] 
  70. Wegari HL, Whakeshum ST, and Mulatu NT (2023). Human capital and its impact on Ethiopian economic growth: ARDL approach to co-integration. Cogent Economics and Finance, 11(1): 2186046. https://doi.org/10.1080/23322039.2023.2186046   [Google Scholar]
  71. Wulandari N, Rina L, Sadjiarto A, Aristawati T, Polim AD, Saibuma P, and Balinol K (2022). The effect of poverty and health on the human development index in central Java Province. Jurnal Penelitian, 19(1): 67-74.   [Google Scholar]
  72. Yusuf MA and Afendi A (2020). The effect of transfer funds to regions and village funds on human development index in districts of West Java province in 2015-2018. Journal of Islamic Accounting and Finance Research, 2(2): 153-168. https://doi.org/10.21580/jiafr.2020.2.2.6360   [Google Scholar]
  73. Zhang J and Danish (2019). The dynamic linkage between information and communication technology, human development index, and economic growth: Evidence from Asian economies. Environmental Science and Pollution Research, 26: 26982-26990. https://doi.org/10.1007/s11356-019-05926-0   [Google Scholar] PMid:31313229