Does Village Funds Impact Village Development Index and Achievement of Sustainable Development Goals in Rural Areas, Indonesia: a Case Study in Kampar District

Objective: This research examines the impact of the Village Fund program on rural development in Kampar District, Indonesia, with a particular focus on the Village Development Index (IDP) and sustainable development goals (SDGs) from 2017 to 2024. While the existing literature on rural development programs is extensive, there is limited research on how Dana Desa affects the IDP and SDGs. Theoretical Framework: This framework is grounded in the premise that development programs should focus on improving the quality of life in rural areas through enhanced access to social services, economic opportunities, and environmental sustainability. The Village Fund's aim to support comprehensive village development aligns with this theory, focusing on fostering "Independent" villages with sustainable growth. This study applies rural development theory to analyze how effectively Village Fund allocations contribute to village transitions from “Developing” to “Independent” statuses, considering the multi-dimensional structure of resilience. Method: A mixed-methods approach was employed, integrating both quantitative and qualitative data analysis. Quantitative data from the Ministry of Villages was analyzed to assess impacts on key dimensions of the VDI: Social Resilience, Economic Resilience, and Environmental Resilience. Qualitative insights were drawn from program outcomes and field observations. Results and Discussion: The results indicate a significant positive effect of the Village Fund on the Social Resilience Index, classified as "High," and a moderate impact on the Economic Resilience Index, classified as "Medium." However, the Environmental Resilience Index showed minimal improvement, categorized as "Low." Negative impact of village funds on the achievement of SDG goals. Although, village status transitions in Kampar District show substantial progress, with many villages moving from ‘Developing’ to ‘Independent’ status. Despite this progress, the limited impact on environmental resilience signals that the region requires greater attention. Research Implications: This study suggests re-evaluating Village Fund allocations to better balance environmental, social, and economic support, with a particular emphasis on environmental sustainability. Improved allocation strategies could bolster holistic rural development, contributing to more balanced resilience across sectors. Originality/Value: This research contributes to the literature on rural development finance by examining the unique impacts of Indonesia’s Village Fund on resilience-based development indicators within the VDI, offering valuable insights into targeted fund allocation for sustainable village growth.