Public spending on basic services and poverty alleviation: Empirical evidence from Eastern Indonesia

Suryani Yuli Astuti; Tri Haryanto; Deni Kusumawardani; Ambar Sukma Widhiana

doi:10.38156/imka.v5i2.784

Suryani Yuli Astuti Universitas Airlangga
Tri Haryanto Universitas Airlangga
Deni Kusumawardani Universitas Airlangga
Ambar Sukma Widhiana Universitas Airlangga

DOI: https://doi.org/10.38156/imka.v5i2.784

Abstract

This study examines the impact of government spending on basic services—education, health, and social protection—along with infrastructure and economic growth on poverty levels in Nusa Tenggara Timur (NTT), Maluku, and Papua. Utilizing panel data from 2008 to 2023, the research initially identifies the Fixed Effect Model (FEM) as the best fit. However, diagnostic tests revealed issues of heteroskedasticity and autocorrelation. To ensure valid and unbiased estimates, the Feasible Generalized Least Square (FGLS) method was employed. The results indicate that government spending on education, economic growth, and access to basic infrastructure (electricity and clean water) significantly reduce poverty. Conversely, spending on health and social protection does not show a significant impact, likely due to geographical barriers and distribution challenges. The findings suggest that territory-based policies focusing on education and infrastructure expansion are crucial for poverty eradication in Eastern Indonesia.

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