Realizing inclusive economic growth: analysis of the determinants of income and poverty reduction on the islands of Sumatra and Java / Mairizal Salehudin Siatan ... [et al.]

Inclusive growth involves social and economic dimensions, emphasizing participation from all societal segments in development processes and outcomes. This study used panel data comprising time series (2017–2022) and cross sections from 10 provinces in Sumatra and 6 in Java, analyzed using the Ordinary Least Square (OLS) method. The results revealed that 1% significant negative inflation reduced inclusive growth by 0.064%, 1 kilometer of good road infrastructure increased it by 0.061%, and a 1-person increase in the workforce boosted it by 0.065%. Regarding income inclusiveness and poverty reduction, a 1-million-rupiah rise in the agricultural sector’s GRDP increased inclusive growth by 0.14%, an additional person in the population contributed 0.99%, and a 1% rise in financial inclusion enhanced it by 0.07%. In Sumatra, the agricultural sector was pivotal for inclusive growth, while in Java, population density was more significant. Across both regions, road infrastructure, workforce, and financial inclusion collectively drove connectivity, productivity, and poverty reduction. This research provides a vital framework for developing area-specific policies that promote inclusive development.