Inclusive Economic Growth and Fiscal Intervention: Could It Reduce Poverty, Inequality, and Unemployment in East Java Post-COVID-19?

dyah purwanti

Abstract


Before the COVID-19 pandemic, East Java Province made remarkable achievements in economic growth accompanied by a continuing downward trend in poverty. The COVID-19 pandemic had a crucial impact, causing East Java to face a reasonably deep economic contraction and a spike in poverty and unemployment. Apart from these problems, East Java Province faces vast inequality before and after the pandemic. These three problems are priorities to be addressed immediately to realize sustainable development. Based on these problems, the study analyzes whether these three problems can be overcome with inclusive growth and local government fiscal intervention, especially in the post-pandemic period. Using panel data regression (2015-2021 period) and a dummy for the COVID-19 variable, this study documents that economic growth in East Java still needs to be fully inclusive. This conclusion is underlined by findings where economic growth is negatively correlated with poverty but positively correlated with inequality and unemployment. On the other hand, fiscal intervention in education spending plays a significant role in reducing poverty. Unfortunately, this study found no determinants that reduce inequality and unemployment in East Java.

Keywords


inclusive economic growth index, government spending, village funds, poverty, Covid-19

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DOI: https://doi.org/10.18196/jesp.v25i1.21694

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