The Nexus Between Poverty, Unemployment, Economic Growth, and Agriculture in Indonesia

Abstract

Aims: This empirical paper seeks to estimate the dynamic linkage amid poverty, economic growth, unemployment, and agriculture in Indonesia Methodology: This paper relies on annual data from 2000 to 2021, collected from the World Bank. ARDL-Bounds testing is applied to examine the dynamic short- and long-run association, as well as co-integration model. The Granger Causality (GC) test is also added to unravel the causal direction amid poverty, unemployment, economic growth, and agricultural productivity. Results: The co-integration relationship among the variables is evident. In the long run, economic growth and agricultural productivity are negatively associated with poverty rates. Economic growth and farm productivity, therefore, are verified to have beneficial roles in assisting poverty eradication. Conversely, unemployment is confirmed as a driver of poverty in Indonesia. The GC test signifies a bidirectional causality between agricultural productivity and poverty, unemployment and poverty, as well as agricultural productivity and economic growth. Conclusion: Following the findings, enhancing farm productivity and fostering economic growth are pivotal instruments for fostering poverty alleviation in Indonesia.