Analysis of Determinants of Economic Growth and Poverty in Districts/Cities of Bali Province

Economic growth and poverty are two central issues in regional development that are interrelated and are the main indicators of development success. In Bali Province, the dynamics of economic growth that has so far been highly dependent on the tourism sector are facing structural challenges, especially in realizing equitable development outcomes and sustainable poverty alleviation. Therefore, it is important to understand the various factors that influence economic growth and poverty, both directly and indirectly, as a basis for formulating more inclusive development policies. This study aims to (1) analyze the direct influence of regional spending, community education levels, Domestic Investment (PMDN), Foreign Investment (PMA), Regional Minimum Wage (UMR), and the number of working population on economic growth; (2) analyze the direct influence of these variables and economic growth on poverty levels; and (3) analyze the indirect influence of these variables on poverty through the mediation of economic growth. This study uses panel data from nine districts/cities in Bali Province during the period 2006 to 2023. The method used is the path analysis technique with a panel data regression approach to test the causal relationship between variables simultaneously. The results of the study indicate that regional spending and UMR have proven to have a direct and significant effect on regional economic growth. Meanwhile, the level of education, PMDN, PMA, and the number of employed population do not have a significant direct effect on economic growth. Furthermore, the variables PMA, UMR, and the number of employed population have a direct and significant effect on the poverty rate, indicating the importance of the role of foreign investment and employment conditions in influencing community welfare. On the other hand, regional spending, education level, PMDN, and economic growth do not have a significant effect on poverty. The results of the path analysis indicate that there is no significant indirect effect of all independent variables on poverty through economic growth as a mediating variable. This finding indicates that economic growth at the regional level has not been able to play a role as an effective intermediary in reducing poverty levels, so a more integrated development strategy is needed that targets the distribution aspect of welfare directly.