The Effect of Capital Expenditure, Agricultural Sector Contribution, and Education on the Poverty Rate

Abstract

This study examines the impact of capital expenditures, education, and the contribution of the agriculture sector on poverty level. The research employs a quantitative approach using panel data regression model, specifically the Fixed Effect Model (FEM) regression. The findings indicate that the agriculture sector contribution has a significant negative impact on poverty level. This result is consistent with the economic structure in most districts of Indonesia, notably in The West Kalimantan Province, where the agricultural sector is a key economic driver and the largest employer. This should be a consideration for the government to make the agricultural sector as a strategic sector in alleviating poverty. Conversely, capital expenditure does not significantly affect the poverty rate, likely due to the reliance on capital-intensive technologies in government projects. Similarly, the education variable has no significant effect, as the mean years of schooling in West Kalimantan Province indicate that most of the population has only attained a junior high school level of education. This underscores the need for the government to reform the education and training systems to foster improved human capital development. Strengthening the agricultural sector and increasing educational outcomes are critical strategies for reducing poverty in the region.