Village Development Initiative as an Alternative Strategy of Rural Poverty Reduction: An Evaluation of Village Fund Program in Indonesia

Abstract

Law Number 6 of 2014 on villages has been ratified due to the persistent poverty suffered by the village community. Through financial decentralization (Village Fund Program) as regulated in the law, poverty reduction policies are expected to be applied by the lowest level of government. This study aims to evaluate the contribution of the Village Law to reducing poverty. Therefore, this study is important not only to assess how deepening process of decentralization works but also evaluate its impact to reduce rural poverty in Indonesia. The study was conducted in three regions in Indonesia, namely West Sumatra, East Java, and North Maluku Provinces represents the western, central, and eastern regions of Indonesia respectively. The findings indicate that although the studied village governments did not specifically design a development program for poverty reduction in their budget, access to basic needs and public facilities improved and rural unemployment reduced significantly.