The Correlation Between Government Expenditure and Agricultural Contribution to Rural Poverty in Indonesia

Yunita Tri Khofifah; Banatul Hayati

doi:10.46851/221

Penulis

Yunita Tri Khofifah Diponegoro University
Banatul Hayati Diponegoro University

DOI:

https://doi.org/10.46851/221

Abstrak

Poverty rates in rural areas of Aceh, Bengkulu, Lampung, West Nusa Tenggara, East Nusa Tenggara, North Sulawesi, Southeast Sulawesi, and Gorontalo exceed the national average, despite the agricultural sector's significant contribution. This study seeks to assess the impact of government spending and agricultural sector contributions on rural poverty in these provinces. This study uses panel data regression for the 2015-2019 period, with secondary data from the Central Bureau of Statistics and the Ministry of Finance, and the analysis covers eight provinces. The results show that the farmer exchange rate, agricultural production value, and rural income inequality significantly affect rural poverty. However, government spending on agriculture, the agriculture sector contribution, and agricultural labor did not show a significant impact. It can be concluded that higher farmer exchange rates and agricultural production reduce poverty, while rising income inequality worsens it. It is recommended that the government continue its efforts to enhance farmer exchange rates and agricultural production while also addressing income inequality. Future research should focus on collecting more detailed regional government expenditure data, separating expenditure allocations and analyzing specific agricultural sectors over extended periods

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