Does Infficiency Fiscal and Human Capital Affect on Poverty in Aceh Province, Indonesia? A Threshold Apporach
Keywords:
Poverty, Inefficency fiscal, Education, Economic growth, Inequality, Threshold panel
Abstract
Poverty is a significant social issue that affects all countries, including Indonesia. The various shortcomings and helplessness experienced by those living in poverty highlight this problem. The government considers poverty a severe issue that requires attention every year. Although the government has implemented several measures to alleviate poverty, reducing or eradicating it is challenging due to the numerous dimensions involved. This study investigates the impact of inefficiency fiscal on poverty in 23 districts/cities of Aceh province. Socio-macroeconomic indicators such as education as proxy human capital, economic growth, and inequality are also examined. This research uses balanced panel data from 2011 to 2020. Research data on remaining government spending comes from the Directorate General of Fiscal Balance (DJPK) of the Ministry of Finance. In contrast, education, economic growth, inequality, and poverty come from the Central Bureau of Statistics. The analysis used is the threshold panel. The study results found that education had a negative effect while inequality had a positive effect. The threshold test results on the unspent fund found an optimal value of 1.725 percent. If the remaining spending is above the threshold, poverty will increase, and vice versa. If the remaining spending is below the threshold, then poverty will decrease. Based on these findings, it is necessary to increase the length of schooling, reduce inequality, and increase efficiency (according to planning).
References
[1] Abdulahi, M. E., Shu, Y., & Khan, M. A. (2019). Resource rents, economic growth, and the role of institutional quality: A panel threshold analysis. Resources Policy, 61(71673081), 293–303. https://doi.org/10.1016/j.resourpol.2019.02.011
[2] Adegboyo, O. S. (2020). Does government spending reduce poverty in Nigeria? Evidence from Auto-Regressive Distributed Lag Specification. E-Journal Ekonomi Bisnis Dan Akuntansi, 7(2), 86. https://doi.org/10.19184/ejeba.v7i2.17322
[3] Akram, Z., Wajid, S., Mahmood, T., & Sarwar, S. (2011). Impact of poor governance and income inequality of poverty in Pakistan. Far East Journal of Psychology and Business, 4(3), 43–55. http://www.fareastjournals.com/files/fejpbv4n3p4.pdf
[4] Arias, R., Giménez, G., Sánchez, L., Arias, R. ;, & Giménez, G. ; (2016). Impact of Education on Poverty Reduction in Costa Rica: A Regional and Urban-Rural Analysis. Contemporary Rural Social Work Journal, 8(1), 2–32. https://digitalcommons.murraystate.edu/crswAvailableat:https://digitalcommons.murraystate.edu/crsw/vol8/iss1/3
[5] Asra, A. (2000). Poverty and inequality in Indonesia: Estimates, decomposition and key issues. Journal of the Asia Pacific Economy, 5(1–2), 91–111. https://doi.org/10.1080/13547860008540785
[6] Bahar, D., & Santos, M. A. (2018). One more resource curse: Dutch disease and export concentration. Journal of Development Economics, 132(January), 102–114. https://doi.org/10.1016/j.jdeveco.2018.01.002
[7] Balasubramanian, P., Burchi, F., & Malerba, D. (2023). Does economic growth reduce multidimensional poverty? Evidence from low- and middle-income countries. World Development, 161, 106119. https://doi.org/10.1016/j.worlddev.2022.106119
[8] Campoy-Muñoz, P., Cardenete, M. A., Miguel-Vélez, F. J. D., & Pérez-Mayo, J. (2022). How does fiscal austerity impact on poverty and inequality? The Spanish case. Economia Politica, 39(3), 715–737. https://doi.org/10.1007/s40888-021-00253-5
[9] Capuno, J. J. (2022). Growth with redistribution, finally: Regional poverty and inequality in the Philippines, 2000–2018. Asia and the Global Economy, 2(2), 100039. https://doi.org/10.1016/j.aglobe.2022.100039
[10] Chu, J. F., Sek, S. K., & Ismail, M. T. (2019). Threshold effects of inflation on economic growth: Evidence from dynamic panel threshold regression analysis for 18 developed economies. Journal of Management, Economics, and Industrial Organization, 3(1), 51–62. https://doi.org/10.31039/ jomeino.2019.3.1.4
[11] De Matteis, A. (2013). Relevance of poverty and governance for aid allocation. Review of Development Finance, 3(2), 51–60. https://doi.org/10.1016/j.rdf.2013.04.001
[12] Deng, T., Shao, S., Yang, L., & Zhang, X. (2013). Has the transport-led economic growth effect reached a peak in China? A panel threshold regression approach. Transportation, 41(3), 567–587. https://doi.org/10.1007/s11116-013-9503-4
[13] Fosu, A. K. (2015). Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context. Oxford Development Studies, 43(1), 44–59. https://doi.org/10.1080/13600818.2014.964195
[14] Gounder, R., & Xing, Z. (2012). Impact of education and health on poverty reduction: Monetary and non-monetary evidence from Fiji. Economic Modelling, 29(3), 787–794. https://doi.org/10.1016/j.econmod.2012.01.018
[15] Hansen, B. E. (1999). Threshold effects in non-dynamic panels : Estimation, testing, and inference. Journal of Econometrics, 93, 345–368.
[16] Hidalgo-Hidalgo, M., & Iturbe-Ormaetxe, I. (2018). Long-run effects of public expenditure on poverty. Journal of Economic Inequality, 16(1), 1–22. https://doi.org/10.1007/s10888-017-9360-z
[17] Hofmarcher, T. (2021). The effect of education on poverty: A European perspective. Economics of Education Review, 83(April), 102124. https://doi.org/10.1016/j.econedurev.2021.102124
[18] Kassouri, Y., Altıntaş, H., Alancioğlu, E., & Kacou, K. Y. T. (2021). New insights on the debt-growth nexus: A combination of the interactive fixed effects and panel threshold approach. International Economics, 168(August), 40–55. https://doi.org/10.1016/j.inteco.2021.08.001
[19] Lin, B., & Li, Z. (2020). Is more use of electricity leading to less carbon emission growth? An analysis with a panel threshold model. Energy Policy, 137(November 2019), 111121. https://doi.org/10.1016/j.enpol.2019.111121
[20] Miar, & Yunani, A. (2020). The Analysis of Influence of The Government Expenditure on Poverty in Indonesia. Jurnal Ekonomi Pembangunan, 18(1), 91–102.
[21] Mehrara, M., & Behzadi Soufiani, M. (2015). The Threshold Impact of Fiscal and Monetary Policies on Inflation : Threshold Model Approach. Journal of Money and Economy, 10(4), 1–27.
[22] Olopade, B. C., Okodua, H., Oladosun, M., & Asaleye, A. J. (2019). Human capital and poverty reduction in OPEC member-countries. Heliyon, 5(8), e02279. https://doi.org/10.1016/j.heliyon.2019.e02279
[23] Putra, R. F. I., & Lisna, V. (2020). Segitiga Kemiskinan-Pertumbuhan-Ketimpangan (Pgi Triangle): Pembangunan Keuangan, Pembangunan Manusia, Dan Ketimpangan Pendapatan Di Asia. Jurnal Ekonomi Dan Pembangunan, 28(2), 77–89. https://doi.org/10.14203/jep.28.2.2020.77-89
[24] Raouf, E. (2022). The impact of financial inclusion on tax revenue in EMEA countries: A threshold regression approach. Borsa Istanbul Review, 22(6), 1158–1164. https://doi.org/10.1016/j.bir.2022.08.003
[25] Rahim, S., Murshed, M., Umarbeyli, S., Kirikkaleli, D., Ahmad, M., Tufail, M., & Wahab, S. (2021). Do natural resources abundance and human capital development promote economic growth? A study on the resource curse hypothesis in Next Eleven countries. Resources, Environment and Sustainability, 4(March), 100018. https://doi.org/10.1016/j.resenv.2021.100018
[26] Sarwar, M. (2011). Impact of education on poverty reduction. Munich Personal RePEc Archive, 31826.
[27] Sasmal, R., & Sasmal, J. (2016). Public expenditure, economic growth and poverty alleviation. International Journal of Social Economics, 43(6), 604–618. https://doi.org/10.1108/IJSE-08-2014-0161
[28] Song, Z. (2021). Economic growth and carbon emissions: Estimation of a panel threshold model for the transition process in China. Journal of Cleaner Production, 278, 123773. https://doi.org/10.1016/j.jclepro.2020.123773
[29] Su, X., Pan, C., Zhou, S., & Zhong, X. (2022). Threshold effect of green credit on firms’ green technology innovation: Is environmental information disclosure important? Journal of Cleaner Production, 380(P1), 134945. https://doi.org/10.1016/j.jclepro.2022.134945
[30] Tachibanaki, T. (2006). Inequality and poverty in Japan. Japanese Economic Review, 57(1), 1–27. https://doi.org/10.1111/j.1468-5876.2006.00355.x
[31] Taruno, H. T. (2019). Public Spending and Poverty Reduction in Indonesia: The Effects of Economic Growth and Public Spending on Poverty Reduction in Indonesia 2009-2018. The Indonesian Journal of Planning and Development, 4(2), 49–56. https://doi.org/10.14710/ijpd.4.2.49-56
[32] Thanh, S. D. (2015). Threshold effects of inflation on growth in the ASEAN-5 countries: A Panel Smooth Transition Regression approach. Journal of Economics, Finance and Administrative Science, 20(38), 41–48. https://doi.org/10.1016/j.jefas.2015.01.003
[33] Yusri, A. (2022). Does Government Expenditure Affect Poverty, Health, and Education? Evidence from Aceh, Indonesia. Jurnal Perencanaan Pembangunan: The Indonesian Journal of Development Planning, 6(1), 1–20. https://doi.org/10.36574/jpp.v6i1.249
[34] Wang, Q. (2015). Fixed-effect panel threshold model using Stata. Stata Journal, 15(1), 121–134. https://doi.org/10.1177/1536867x1501500108
[35] Xu, X., Zhang, N., Zhao, D., & Liu, C. (2020). The effect of trade openness on the relationship between agricultural technology inputs and carbon emissions: evidence from a panel threshold model. Environmental Science and Pollution Research, 28(8), 9991–10004. https://doi.org/10.1007/s11356-020-11255-4
[2] Adegboyo, O. S. (2020). Does government spending reduce poverty in Nigeria? Evidence from Auto-Regressive Distributed Lag Specification. E-Journal Ekonomi Bisnis Dan Akuntansi, 7(2), 86. https://doi.org/10.19184/ejeba.v7i2.17322
[3] Akram, Z., Wajid, S., Mahmood, T., & Sarwar, S. (2011). Impact of poor governance and income inequality of poverty in Pakistan. Far East Journal of Psychology and Business, 4(3), 43–55. http://www.fareastjournals.com/files/fejpbv4n3p4.pdf
[4] Arias, R., Giménez, G., Sánchez, L., Arias, R. ;, & Giménez, G. ; (2016). Impact of Education on Poverty Reduction in Costa Rica: A Regional and Urban-Rural Analysis. Contemporary Rural Social Work Journal, 8(1), 2–32. https://digitalcommons.murraystate.edu/crswAvailableat:https://digitalcommons.murraystate.edu/crsw/vol8/iss1/3
[5] Asra, A. (2000). Poverty and inequality in Indonesia: Estimates, decomposition and key issues. Journal of the Asia Pacific Economy, 5(1–2), 91–111. https://doi.org/10.1080/13547860008540785
[6] Bahar, D., & Santos, M. A. (2018). One more resource curse: Dutch disease and export concentration. Journal of Development Economics, 132(January), 102–114. https://doi.org/10.1016/j.jdeveco.2018.01.002
[7] Balasubramanian, P., Burchi, F., & Malerba, D. (2023). Does economic growth reduce multidimensional poverty? Evidence from low- and middle-income countries. World Development, 161, 106119. https://doi.org/10.1016/j.worlddev.2022.106119
[8] Campoy-Muñoz, P., Cardenete, M. A., Miguel-Vélez, F. J. D., & Pérez-Mayo, J. (2022). How does fiscal austerity impact on poverty and inequality? The Spanish case. Economia Politica, 39(3), 715–737. https://doi.org/10.1007/s40888-021-00253-5
[9] Capuno, J. J. (2022). Growth with redistribution, finally: Regional poverty and inequality in the Philippines, 2000–2018. Asia and the Global Economy, 2(2), 100039. https://doi.org/10.1016/j.aglobe.2022.100039
[10] Chu, J. F., Sek, S. K., & Ismail, M. T. (2019). Threshold effects of inflation on economic growth: Evidence from dynamic panel threshold regression analysis for 18 developed economies. Journal of Management, Economics, and Industrial Organization, 3(1), 51–62. https://doi.org/10.31039/ jomeino.2019.3.1.4
[11] De Matteis, A. (2013). Relevance of poverty and governance for aid allocation. Review of Development Finance, 3(2), 51–60. https://doi.org/10.1016/j.rdf.2013.04.001
[12] Deng, T., Shao, S., Yang, L., & Zhang, X. (2013). Has the transport-led economic growth effect reached a peak in China? A panel threshold regression approach. Transportation, 41(3), 567–587. https://doi.org/10.1007/s11116-013-9503-4
[13] Fosu, A. K. (2015). Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context. Oxford Development Studies, 43(1), 44–59. https://doi.org/10.1080/13600818.2014.964195
[14] Gounder, R., & Xing, Z. (2012). Impact of education and health on poverty reduction: Monetary and non-monetary evidence from Fiji. Economic Modelling, 29(3), 787–794. https://doi.org/10.1016/j.econmod.2012.01.018
[15] Hansen, B. E. (1999). Threshold effects in non-dynamic panels : Estimation, testing, and inference. Journal of Econometrics, 93, 345–368.
[16] Hidalgo-Hidalgo, M., & Iturbe-Ormaetxe, I. (2018). Long-run effects of public expenditure on poverty. Journal of Economic Inequality, 16(1), 1–22. https://doi.org/10.1007/s10888-017-9360-z
[17] Hofmarcher, T. (2021). The effect of education on poverty: A European perspective. Economics of Education Review, 83(April), 102124. https://doi.org/10.1016/j.econedurev.2021.102124
[18] Kassouri, Y., Altıntaş, H., Alancioğlu, E., & Kacou, K. Y. T. (2021). New insights on the debt-growth nexus: A combination of the interactive fixed effects and panel threshold approach. International Economics, 168(August), 40–55. https://doi.org/10.1016/j.inteco.2021.08.001
[19] Lin, B., & Li, Z. (2020). Is more use of electricity leading to less carbon emission growth? An analysis with a panel threshold model. Energy Policy, 137(November 2019), 111121. https://doi.org/10.1016/j.enpol.2019.111121
[20] Miar, & Yunani, A. (2020). The Analysis of Influence of The Government Expenditure on Poverty in Indonesia. Jurnal Ekonomi Pembangunan, 18(1), 91–102.
[21] Mehrara, M., & Behzadi Soufiani, M. (2015). The Threshold Impact of Fiscal and Monetary Policies on Inflation : Threshold Model Approach. Journal of Money and Economy, 10(4), 1–27.
[22] Olopade, B. C., Okodua, H., Oladosun, M., & Asaleye, A. J. (2019). Human capital and poverty reduction in OPEC member-countries. Heliyon, 5(8), e02279. https://doi.org/10.1016/j.heliyon.2019.e02279
[23] Putra, R. F. I., & Lisna, V. (2020). Segitiga Kemiskinan-Pertumbuhan-Ketimpangan (Pgi Triangle): Pembangunan Keuangan, Pembangunan Manusia, Dan Ketimpangan Pendapatan Di Asia. Jurnal Ekonomi Dan Pembangunan, 28(2), 77–89. https://doi.org/10.14203/jep.28.2.2020.77-89
[24] Raouf, E. (2022). The impact of financial inclusion on tax revenue in EMEA countries: A threshold regression approach. Borsa Istanbul Review, 22(6), 1158–1164. https://doi.org/10.1016/j.bir.2022.08.003
[25] Rahim, S., Murshed, M., Umarbeyli, S., Kirikkaleli, D., Ahmad, M., Tufail, M., & Wahab, S. (2021). Do natural resources abundance and human capital development promote economic growth? A study on the resource curse hypothesis in Next Eleven countries. Resources, Environment and Sustainability, 4(March), 100018. https://doi.org/10.1016/j.resenv.2021.100018
[26] Sarwar, M. (2011). Impact of education on poverty reduction. Munich Personal RePEc Archive, 31826.
[27] Sasmal, R., & Sasmal, J. (2016). Public expenditure, economic growth and poverty alleviation. International Journal of Social Economics, 43(6), 604–618. https://doi.org/10.1108/IJSE-08-2014-0161
[28] Song, Z. (2021). Economic growth and carbon emissions: Estimation of a panel threshold model for the transition process in China. Journal of Cleaner Production, 278, 123773. https://doi.org/10.1016/j.jclepro.2020.123773
[29] Su, X., Pan, C., Zhou, S., & Zhong, X. (2022). Threshold effect of green credit on firms’ green technology innovation: Is environmental information disclosure important? Journal of Cleaner Production, 380(P1), 134945. https://doi.org/10.1016/j.jclepro.2022.134945
[30] Tachibanaki, T. (2006). Inequality and poverty in Japan. Japanese Economic Review, 57(1), 1–27. https://doi.org/10.1111/j.1468-5876.2006.00355.x
[31] Taruno, H. T. (2019). Public Spending and Poverty Reduction in Indonesia: The Effects of Economic Growth and Public Spending on Poverty Reduction in Indonesia 2009-2018. The Indonesian Journal of Planning and Development, 4(2), 49–56. https://doi.org/10.14710/ijpd.4.2.49-56
[32] Thanh, S. D. (2015). Threshold effects of inflation on growth in the ASEAN-5 countries: A Panel Smooth Transition Regression approach. Journal of Economics, Finance and Administrative Science, 20(38), 41–48. https://doi.org/10.1016/j.jefas.2015.01.003
[33] Yusri, A. (2022). Does Government Expenditure Affect Poverty, Health, and Education? Evidence from Aceh, Indonesia. Jurnal Perencanaan Pembangunan: The Indonesian Journal of Development Planning, 6(1), 1–20. https://doi.org/10.36574/jpp.v6i1.249
[34] Wang, Q. (2015). Fixed-effect panel threshold model using Stata. Stata Journal, 15(1), 121–134. https://doi.org/10.1177/1536867x1501500108
[35] Xu, X., Zhang, N., Zhao, D., & Liu, C. (2020). The effect of trade openness on the relationship between agricultural technology inputs and carbon emissions: evidence from a panel threshold model. Environmental Science and Pollution Research, 28(8), 9991–10004. https://doi.org/10.1007/s11356-020-11255-4
Published
2024-11-25
How to Cite
Masrizal, M., T. Zulham, Aliasuddin, A., & Taufiq C. Dawood. (2024). Does Infficiency Fiscal and Human Capital Affect on Poverty in Aceh Province, Indonesia? A Threshold Apporach. Review of Applied Socio-Economic Research, 28(2), 70-82. https://doi.org/10.54609/reaser.v28i2.561
Section
Articles
Copyright (c) 2024 Review of Applied Socio-Economic Research
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Copyright ©2019 Pro Global Science Association
All rights reserved. No part of this publication may be reproduced, stored, transmitted or disseminated, in any form, or by any means, without prior written permission from Pro Global Science Association, to whom all requests to produce copyright material should be directed, in writing.
