Analysis of Factors Affecting Poverty in Eastern Indonesia

Abstract

One of the indicators of the success of development is the level of poverty. This study aims to determine the effect of Economic Growth, Open Unemployment Rate, Inflation, Human Development Index, and Domestic Investment on the poverty rate in 34 Provinces in Indonesia in 2017-2022. Data were obtained from the official website of Statistics Indonesia. This study used a quantitative method and data analysis used pane data regression with the selected mode Fix Effect Mode (FEM) with the help of Eviews9 software. The results showed that simultaneously economic growth, open unemployment rate, inflation, human development index, and domestic investment influence poverty levels in 34 provinces in Indonesia. Meanwhile, partially, Economic Growth, Open Unemployment Rate, Inflation, and Human Development Index significantly reduced poverty levels, while Domestic Investment did not significantly reduce poverty levels. For that reason, in order to reduce poverty levels in Indonesia, governments can focus on boosting economic growth and the human development index, job creation and suppressing inflation. The absorption of labor in the labor market will provide wages and increase income to meet daily needs which then reduce the poverty level. The decrease in inflation can increase people's purchasing power because people have adequate financial capacity to consume and meet their daily needs. The increase in the human development index will increase productivity, output, and remuneration for a company.