Analysis of Inclusive Economic Development and Its Driving Factors in Papua Province

One of the efforts to develop an inclusive economy in the poorest province in Indonesia, Papua, is through fiscal policy. This research has two main objectives, namely: (i) assessing the Inclusive Economic Development in Papua; and, (ii) analyzing the relationship between fiscal policy in realizing Papua Inclusive Economic. Papua Province has the lowest Inclusive Economic Development Index (IEDI) ranking in Indonesia. This low level of caused 26.8 percent of the poor population in Papua Province. Economic development interventions through fiscal policy need to be carried out. Analysis of regional fiscal policy factors that are significant to the IEDI of each city/district can pay attention to policy directions from the past that need to be prioritized so that policy strategies can be developed. Novelty: This research is the first to observe Papua's IEDI through government expenditure factors. This research is the first that show how statistically to modelling IEDI. The fiscal policy is observed through the budgeting of the General Allocation Fund (GAF), Physical Special Allocation Fund (PSAF), Non-Physical Special Allocation Fund (NPSAF), and Village Fund (VilF). Data is observed in 2019 to 2021. Panel data regression model is used to analysis the effect of expenditure. The REM model obtained gives an R-sq of 41.9% with high IEDI prediction accuracy. This study found that PSAF and NPSAF were the source of the increase in IEDI. These findings indicate that the PSAF and NPSAF (physical and non-physical) is more efficient than the GAF and VilF on inclusive economic development in Papua.

General Background: Development and environmental sustainability are interdependent components of national progress. Specific Background: Environmentally inclusive development emphasizes the wise, planned, and sustainable use of resources to enhance quality of life. Knowledge Gap: However, the interplay between income inequality, inclusive economic development, and environmental quality remains underexplored in the Indonesian context. Aim: This study investigates the dynamic relationship between income inequality, inclusive development, and environmental quality across Indonesia’s 34 provinces. Results: The findings reveal a bidirectional negative relationship: inclusive economic development significantly reduces income inequality, while lower income inequality promotes more inclusive development. Novelty: This research provides empirical evidence on the reciprocal nature of inequality and inclusivity within a sustainability framework, contributing to a deeper understanding of socio-environmental policy integration in developing economies. Implications: The results underscore the importance of implementing inclusive and environmentally aware development strategies as a means to address inequality and enhance long-term sustainability outcomes. Highlights: Highlights the reciprocal relationship between inequality and inclusive development. Provides empirical evidence from 34 Indonesian provinces. Emphasizes the role of sustainability in equitable economic growth. Keywords: Income Inequality, Inclusive Development, Environmental Quality, Sustainable Development

Research originality — This study is the first to analyze how government fiscal instruments, specifically the local government spending, have a different role in pillars of inclusive economic development. In addition, the study examines whether village funds, which are the lowest-level of fiscal instrument, play a strategic role in creating inclusivity in regional economic development. It provides a synthesis of knowledge on the role of government fiscal policy in promoting inclusive economic development. Research objectives — This study provides an overview of the empirical findings on how local government spendings and village funds affect the realization of inclusive economic development. Research methods — The study utilized data from the inclusive economic development index (inclusive index), regional spending based on economic, education, and health functions, and village funds at the provincial level from 2015 to 2021. The study used panel data with multivariate regression analysis. Empirical results — The study found that expenditure for education and road strengthened the inclusive index. Economic and health expenditures showed a partial impact on inclusive economic development. Economic expenditure was found to strengthen the economic growth pillar, but it reduced the equity and poverty pillar. The finding underlines that economic expenditure seems to be pro-growth, but not pro-poor. Another finding is that the village funds supported the pillar of equity and poverty. Implications — The implication of this study is the improvement of the quality of government spending, especially educational expenditure, which has been proven to have a significant impact on the inclusive index. Another implication is the possibility that the quality of economic expenditure is improved because it is not fully pro-poor.

The aim of the article is to generalize the approaches to the definitions of inclusive economic development as a modern paradigm of intensification of innovation. The main methodological method of research is a system-structural approach that allows you to most effectively organize the search to solve problems. Methods of comparative, functional analysis, classification are also used. The theoretical basis of the article has been the conceptual provisions and scientific principles developed by domestic and foreign scientists on issues of inclusive economic development, tools for its implementation. However, the problems related to the development and implementation of an effective mechanism for the implementation of the inclusive economy in the context of the intensification of innovative development remain incomplete. The importance and significance of these issues led to the choice of the topic of the article, setting the purpose and objectives of the study. The main indicators of Ukraine’s inclusive development are analysed and the factors hindering the inclusion effective development are identified. The adoption of a new system for assessing economic development by the world community will help to adjust the domestic policies of a number of states, which will contribute to international economic integration and the development of the methodological framework of national and international statistics bodies. It has been found that 11 indicators out of 12 in Ukraine have a negative trend. Among them, the largest decline has been observed in labor productivity and the share of public debt in GDP. One of the most important obstacles to inclusive economic development has been found to be high levels of inequality, which limit access to education for different groups and negatively affect the labor market, which is filled annually with low-skilled labor. Expanding quality and access to education plays a crucial role in overcoming this barrier. It has been proven that the concept of inclusive development can best ensure the implementation of the principles of sustainable and balanced development, while avoiding such threats as: crises related to lack of resources and limited access to them; increasing social inequality and poverty; exclusion of certain marginal groups from the political, economic and social life of society; rising unemployment; social and political conflicts; environmental crises. The relevance of inclusive innovations for the economy development is substantiated and the directions of state policy are formed to ensure inclusive innovation development. The directions of cooperation between the state and business are proposed to ensure not only inclusive economic development, but also its connection with public investment policy, which would reduce the level of inequality in society and contribute to improving the citizens’ well-being.

This study aims to analyze the relationship between regional financial performance and inclusive economic development in Indonesia using secondary data from 34 provinces in Indonesia from 2011-2021. The data sources for this study were collected from the National Development Planning Agency, Directorate General of Fiscal Balance, and Statistics Indonesia. This study uses panel data regression analysis with a fixed effect model because it can reduce bias compared to other panel data models, especially those caused by unobservable time-invariant variables. The results showed that regional financial performance, as measured by the fiscal decentralization ratio, fiscal independence ratio, capital expenditure ratio, and social assistance expenditure ratio, significantly influenced inclusive economic development in Indonesia. Fiscal decentralization and social assistance spending have a positive relationship with inclusive economic development. Meanwhile, fiscal independence and capital expenditure have a negative relationship with inclusive economic growth.

High economic growth does not always positively correlate with equitable welfare improvement. Inclusive economic development is needed, emphasizing economic growth that not only increases per capita income but also provides broader and more equitable benefits. This study analyzes the influence of financial capital, human capital, and technology on inclusive economic development, with infrastructure as an intervening variable. The research employs a quantitative method across 34 provinces in Indonesia over eight years, from 2016 to 2023. The data utilized in this study consists of secondary data sourced from the Central Statistics Agency (Badan Pusat Statistik or BPS) and the Directorate General of Fiscal Balance (Direktorat Jenderal Perimbangan Keuangan or DJPK). The study is grounded in endogenous economic growth theory, public finance theory, and Amartya Sen's capability approach. Data analysis uses the Partial Least Square (PLS) method with WarpPLS 7.0 software. The results indicate that financial capital contributes positively to inclusive economic development and infrastructure, with coefficient values of 0.63 and 0.52, respectively. Furthermore, human capital and infrastructure also have a significant positive impact on inclusive economic growth, with coefficient values of 0.10 and 0.16, respectively. Meanwhile, technology exhibits a positive but not significant influence on inclusive economic development, with a coefficient value of 0.06.

Economic, social and ecological cohesion should remain at the heart of the global economy strategy to ensure that all capacities are mobilized and focused on the pursuit the inclusive development vector under the sustainable conditions. The purpose of the study is to investigate the evolution of development, formation and prospects of domestic economy development inclusive model implementation. The objectives of the study are: domestic inclusive economic growth model process generalization; existing approaches for inclusive growth measurement analysis; economic, social and ecological systemic changes in the domestic economic system justification. The methodological basis of the research is general scientific and special methods of economic phenomena and processes cognition. It has been determined that modern economic development is characterized by irregularity and represents extractive socio-economic system that limits equal access to opportunities, outputs and resources. The necessity of national inclusive development model implementation that would take into account the evolutionary ecological needs of the population and ensure the sustainability and competitiveness of the domestic economy, uniform population welfare increase has been shown. The expediency of own model of inclusive development design that would absorb the features of existing in the world models, but considering the ecological component, that will fit the concept of sustainable development has been substantiated. The modern tendencies of theoretical foundations and approaches to models of inclusive growth development have been defined. The Gini index of the countries rating was analyzed, on the basis of which the level of inequality of welfare of the population of Ukraine has been determined. The dynamics of the Gini Index in Ukraine change during the study period has been determined. Imperative knowledge about the inclusive economic growth model theory evolution has been systematized. The comparative analysis of existing approaches to inclusive growth measurement has been carried out. The number of systemic shifts to ensure equality of access to work outcomes changes and their equal distribution, taking into account the requirements of the sustainable development concept have been proposed. The possibility of introducing a comprehensive economic, social and environmental policy at the national and local levels has been considered. It has been determined that in the current context, the model of inclusive development is the most acceptable for Ukraine and is the basis for ensuring the sustainability and competitiveness of the domestic economy. The expediency of inclusive economic growth domestic model development and implementation has been substantiated. Further research should be aimed at design and scientific justification of inclusive economic development domestic model that would be capable to maintain high growth rates together with equal access to resources for all members of society provision

This study aims to examine the effect of financial performance on inclusive economic growth through the human development index in Central Java Province. There are 35 districts / cities that are sampled with a period of five years, namely 2018-2023. In this study, financial performance is measured by regional financial independence, regional financial effectiveness, and harmonization of regional expenditures, while inclusive economic development is measured using the IPEI. This study was conducted with regression tests with a random effect approach and path analysis. The results show that financial performance in the form of the degree of fiscal decentralization, harmonization of regional expenditure has a significant positive influence on inclusive development and HDI. Meanwhile, the effectiveness of PAD has a significant positive effect on inclusive development but a significant negative effect on HDI. The results of path analysis show that HDI plays a significant mediating role between DDF, EFE, BO, and BM in relation to IPEI. HDI has a significant positive effect on IPEI with a p-value of 0.000, indicating that an increase in HDI promotes inclusive economic development. Indirectly, DDF, BO, and BM also show significant positive effects on IPEI through HDI, with p-values of 0.000, 0.000, and 0.0032 respectively. However, EFE shows a significant negative relationship with IPEI through HDI, with a p-value of 0.000, indicating the need for more effective management of PAD to support human development.

The growing income inequalities along with lack of access to education and health in developing economies have resulted in economic and social restlessness which eventually shifted the attention of policymakers from growth objectives to inclusive economic development. This study constructs an index for inclusive development using UNDP’s (2011) human development index approach. Furthermore, this study analyzes the role of the financial and physical infrastructure to fight against disparities in income distribution and providing access to education and health thereby enabling the economy to move along the road that leads to inclusive development. The findings of this paper imply that physical infrastructure and financial development positively affect inclusive development. Thus, there is a need to promote investment in financial services and physical infrastructure to foster inclusive economic development. Keywords: Physical Infrastructure, Financial Issue, Inclusive development, Pakistan.

Until 2017, Papua was the only province in Indonesia where human development was classified aslow at 59.09. However, the speed of human development in the last three years is the highest in Indonesia. The purpose of this study is to determine the speed of human development in Papua during 2015-2017 and comparison with other provinces in Indonesia and predict how many years it will take so that human development in Papua can be equal to that of other provinces. Although this study only uses a very simple descriptive analysis method, but by applying the velocity formula of two moving objects it can produce important information to develop strategies to boost human development in Papua. As a result, President Jokowi's development policy in Papua made the speed of human development in Papua Province ranked first (top movers) during 2015-2017 with its an average annual speed is 1.36 percent per year. This achievement is higher than the achievements of West Papua and Maluku Provinces. It means that assuming a human development situation such as this period, within the next 15 years, human development achievements in the Papua Province will be able to outperform human development in West Papua and Maluku Provinces.

The paper presents the results of scientific research «Structural change as a basis of inclusive economic development of Ukraine» in terms of regional aspects. The concept of inclusive economic development is a new paradigm which can substitute traditional and outdated approaches to social and economic development measurement (as GDP for example). Leading international organizations and institutions conduct studies on different aspects of inclusiveness, such as: OECD, United Nations Development Program (UNDP), the European Commission, International Monetary Fund (IMF), World Economic Forum (WEF), World Bank, International Policy Centre for Inclusive Growth (IPC-IG). In the presented scientific paper, the regional aspects and trends of inclusive economic development are brought to a focus. An analytical overview of the most representative and important international indices and ratings, relevant to the subject of study, which contain Ukrainian data, is presented. Among the most important indexes are: The Legatum Prosperity Index, The Global Competitiveness Index, The Global Innovation Index, Index of Economic Freedom, Doing Business Index etc. Also authors present approaches to assessing the level of Ukrainian regions’ inclusive development in the context of sustainable development goals (SDG). The methodology is modified by the authors on the ground of the Inclusive Development Index (by World Economic Forum). Inclusive Regional Development index of Ukraine (IRD) developed and presented by authors makes it possible to assess the regional characteristics of the seven key socio-economic areas: Economy, Business, Education, Health, Security & Defense, Environment, Social Capital. The key problem areas are identified. Directions of State structural policies are suggested to achieve the goals of inclusive development based on regional characteristics. The authors identified key problems and justification to promote the regions towards inclusiveness and sustainability.

Income distribution (Gini ratio) plays an important role in determining the level of public welfare and the quality of inclusive economic development. High income inequality can worsen poverty conditions and hinder the creation of equitable development. This study aims to analyze the effect of income distribution on inclusive economic development in Gorontalo Province by considering poverty as an intervening variable. The method used is path analysis with secondary data from the Gorontalo Province BPS during 2011–2024. The results show that income inequality has a positive and significant effect on poverty and a negative and significant effect on inclusive economic development. Poverty also has a negative impact on inclusive economic development and serves as a significant intervening variable. These findings imply that reducing inequality and poverty is crucial in promoting sustainable inclusive economic development in Gorontalo Province.

This study aims to analyze the spatial relationship of inclusive economic development between provinces in Java and how the open unemployment rate, inflation and average length of schooling affect the inclusive economic development index. The analysis was carried out using spatial concepts or not by using the value of the inclusive economic development index as the dependent variable and the open unemployment rate, inflation and average length of schooling as independent variables. The analytical methods and tools used in this study include Moran index analysis to see the spatial relationship of inclusive economic development between provinces, and panel data regression analysis to see the effect of the open unemployment rate, inflation and average length of schooling on the inclusive economic development index. . Based on the results of the study, it shows that there is no spatial linkage of inclusive economic development between provinces in Java. The open unemployment rate, inflation and the average length of schooling have a significant effect on the inclusive economic development index.

One of the policies adopted by the government in development, especially in developing countries, is inclusive economic growth. This study examines how the effect of equalization funds as the main variables, as well as GDP per capita and open unemployment as control variables, on the Inclusive Economic Development Index (IDEI) as a proxy for inclusive economic growth. This research was conducted in 38 regencies/cities in East Java, in the period 2014-2020, using the PVECM Model as an analysis tool. In addition, this research also provides strategies and policy formulations in an effort to increase inclusive economic growth. The results show that in the long-term DAU and GDP per capita have a significant positive effect on inclusive development. Meanwhile, in the short term, DAK and GDP per capita have a positive insignificant effect. It can be concluded that the balancing fund supports inclusive economic development in East Java. Keywords: intergovernmental transfer funds, inclusive economic development index, inclusive economic growth

This chapter discusses inclusive economic development, with a particular focus on social enterprises as one way in which inclusive economic development can be achieved. Inclusive economic development is an approach that addresses many of the issues of inequality and unsustainability that have emerged from more traditional economic development approaches. Recognizing some of the key limitations of social entrepreneurship, the chapter notes that social entrepreneurship is not a panacea for all the social and ecological issues that we face. Nonetheless, it argues that social enterprises present a strong and viable alternative to the traditional for-profit/not-for-profit silos and an important driver of inclusive economic development.