Determinant Factors of Percapita Income and Poverty Level in the Eastern Indonesia Period Year 2004 – 2016

12 Pages Posted: 26 Feb 2019

See all articles by Muhammad Yudhi Luthfi

Muhammad Yudhi Luthfi

Universitas Trisakti - Economics and Business Faculty

Muhammad Zilal Hamzah

Sekolah Tinggi Ilmu Ekonomi Bisnis Indonesia; Centre for Financial Inclusion

Sabila Aqlima Izazi

PT. Sepulsa Teknologi Indonesia

Date Written: December 30, 2018


Eastern Indonesia is a marginalized area compared to western part of Indonesia. This is proven by high inequality. In terms of fastening the realization of economic development expansion and equity distribution so it can be enjoyed evenly by the group of people, so Indonesian government make a concept of development planning what-so-called The Acceleration of Master Plan And Economic Development Expansion (MP3EI). This concept divided the development based on Economic Corridor.

The development of economic corridor in Indonesia has been done based on potential and the advantages of each region that scattered throughout Indonesia with the purpose of economic development, which followed by the decreasing of economic gap. Based on this situation, this research’s purpose is to analyze the determination of income per capita and poverty in economic corridor of Papua – Maluku Islands. Method for this research is using regression method panel data year 2004 – 2016 in Economic Corridor of Papua – Maluku Islands.

Based on this research’s outcome: (i). allocation of education budget and allocation of infrastructure budget have a positive and significant effect toward income per capita. Meanwhile, FDI and DDI has no significant effect toward per capita income; (ii). Foreign investment, allocation of education budget, and tax has positive and significant effect toward consumption expenditure but DDI, Subsidy and Per capita income have no significant effect toward consumption expenditure; (iii). Per capita Income, FDI and education have a significant effect toward Poverty level but DDI has no significant effect on Poverty level at in Papua Province and Maluku Islands.

For reaching the purpose of MP3EI, the achievement of welfare is characterized by decreasing the level of economic gap and increasing of income per capita so that, it necessary to pay attention to supporting variables such as: infrastructure that really needed for increased the revenue and income distribution. The existence of infrastructure can give connectivity and increase income per capita in economic corridor area. Distribution of infrastructure budget allocation throughout the economic corridor is able to encourage economic growth of Indonesia and help area which is less developed to catch up with more developed area. The allocation of education budget is necessary for high public consumption expenditure indicates sufficient income as well as public consumption is determined by price. Controlled prices are due to the policy of price monitoring and improvement of commodity trading, improvement of central and regional policy coordination, and the stable core inflation.

The investment consists of FDI and DDI. Investment encourages economic activity among others are increased regional growth, increased competitive advantages and technology transfer. In attracting investment so that the value of increased investment conducted improvements in competitiveness and investor perceptions. The improvement of competitiveness has driven by strategic infrastructure development programs and improvements in the business climate as well as the continued impact of policy packages that are expected to drive business activities. The implication of this research is that the crucial problem facing the government today is how to increase investor appeal to invest capital in various regions of Indonesia, especially Eastern Indonesia.

Keywords: investment value, infrastructure budget allocation, education budget allocation, per capita income, consumption level, labor force

Suggested Citation

Luthfi, Muhammad Yudhi and Hamzah, Muhammad Zilal and Izazi, Sabila Aqlima, Determinant Factors of Percapita Income and Poverty Level in the Eastern Indonesia Period Year 2004 – 2016 (December 30, 2018). OIDA International Journal of Sustainable Development, Vol. 11, No. 12, pp. 41-52, 2018. Available at SSRN:

Muhammad Yudhi Luthfi (Contact Author)

Universitas Trisakti - Economics and Business Faculty ( email )

Jl. Kyai Tapa No.1, Grogol, RT.6/RW.16
Tomang, Grogol petamburan, Kota Jakarta Barat
Jakarta, Daerah Khusus Ibukota

Muhammad Zilal Hamzah

Sekolah Tinggi Ilmu Ekonomi Bisnis Indonesia ( email )

Jl.Raya Kebayoran Lama No.46
Jakarta, ID DKI Jakarta 11560
62215307009 (Phone)
62215307008 (Fax)

Centre for Financial Inclusion ( email )

West Jakarta, 11440

Sabila Aqlima Izazi

PT. Sepulsa Teknologi Indonesia ( email )


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