The Effect of Effectiveness Ratio, Capital Expenditure, and Economic Growth on the Poverty Rate in Regency and City Governments of North Sumatra Province
DOI:
https://doi.org/10.5281/Keywords:
Effectiveness Ratio, Capital Expenditure, Economic Growth, Poverty RateAbstract
This study aims to analyze the effects of the Effectiveness Ratio, Capital Expenditure, and Economic Growth on the Poverty Rate in regency and city governments within North Sumatra Province. The study uses panel data for the 2020–2023 period, consisting of 132 observations (33 regencies/cities over 4 years). The analytical method employed is panel data regression with the Fixed Effect Model (FEM) approach, selected based on the results of the Chow and Hausman tests. The results show that, partially, the Effectiveness Ratio has a negative but insignificant effect on the poverty rate. Capital Expenditure has a positive but insignificant effect, indicating that increased infrastructure spending has not yet effectively reduced poverty levels. Meanwhile, Economic Growth has a positive and significant effect on the poverty rate, meaning that economic growth has not been inclusive enough to alleviate poverty. Simultaneously, the three variables significantly affect the poverty rate. These findings highlight the importance of regional development planning that is not only focused on economic growth and capital expenditure but also on equitable distribution of development outcomes to directly reach impoverished communities
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