Analysis of Factors Causing Inter-regional Income Inequality in West Nusa Tenggara Province, Indonesia

Inter-regional income inequality remains a structural issue in regional economic development facing West Nusa Tenggara (NTB) Province. This inequality is influenced by various factors related to infrastructure conditions, investment, labor markets, and the quality of human resources. This study aims to analyze the impact of road length, Domestic Direct Investment (PMDN), Foreign Direct Investment (PMA), the Open Unemployment Rate (TPT), and the Human Development Index (IPM) on inter-regional income inequality in NTB Province. The study covers all regencies and cities in NTB Province, utilizing relevant data from the study period. Analysis was conducted using multiple linear regression with the aid of EViews 12 software, employing the inter-regional Theil Index as the indicator for inter-regional income inequality. The research model incorporates road length and investment (PMDN and PMA) in logarithmic form, while TPT and IPM serve as additional explanatory variables. Estimation results indicate that, individually, road length, domestic investment (PMDN), foreign investment (PMA), the open unemployment rate (TPT), and the Human Development Index (IPM) do not have a significant effect on inter-regional income inequality at the 5 percent significance level. Nevertheless, the signs of the coefficients suggest that road length, PMA, TPT, and IPM tend to be associated with a reduction in inequality, whereas PMDN tends to be associated with an increase in inequality. Simultaneously, the five variables also do not significantly affect inequality, with an F-statistic of 0.777233 and a probability of 0.589999. The R-squared value of 0.301577 indicates that approximately 30.16 percent of the variation in inequality can be explained by the variables in the model, while the remainder is influenced by factors outside the model. These findings suggest that inter-regional economic inequality in NTB is a multidimensional and structural phenomenon that cannot be explained solely by road infrastructure, investment, unemployment, and human development. Therefore, policies aimed at promoting equity should focus on strengthening inter-regional connectivity, ensuring the equitable distribution of investment, enhancing workforce quality and productivity, developing human resources, diversifying the economy, and strengthening economic linkages between regencies and cities.