Abstract
Regional disparities between rural and urban areas in Indonesia are still being an important issue inthe economic development. The government has carried out an economic stimulus in the village,one of them is through the Village Fund program for village development. One of the potentialpositive effects of implementing the Village Fund in Indonesia is creating a local economicinstitution that is expected to be able to develop the competition between villages through Village-Owned Enterprises (BUMDes). This study aimed to find out the empirical evidence whetherBUMDes, as one of the programs driving the village economy affected the welfare of ruralcommunities by looking at the differences in the improvement of the village economy. This studyused BUMDes and Village Potential (Podes) data in 2014 and 2018, and Village Fund Allocationas a proxy for economic activity at the village level by using the econometric model approach ofPropensity Score Matching and Difference in Difference with a fixed effect model. The resultsshowed that villages that had BUMDes gave a greater effect than the ones which did not haveBUMDes in improving the economy of the village community.
Highlights
Regional disparities between rural and urban areas in Indonesia are still being an important issue in the economic development
One of the sustainable developments in the village economy is through the Enterprises the villagers run and how they manage the potentials of the village
There has been few researches focusing on the village Enterprises measured as a whole for the existing villages since the researchers focused on a certain scope of village; besides, the availability of aggregate data were not free-accessed
Summary
Regional disparities between rural and urban areas in Indonesia are still being an important issue in the economic development. Zuhdiyaty & Maryunani (2019) mentioned the interesting facts through the use of Sustainable Livelihood Aprroach (SLA) method and they conducted a case study on BUMDes Kalipucang, Pasuruan, Indonesia They found out that the BUMDes formation modal was taken from the village potentials covering natural capital, physical capital, human benefits but to develop their rural areas. Velocity of money in the village was quite high, This research focused on the empirical whilst the human capital was considered weak evidence on whether or not the village as there were many less-educated people It Enterprises implemented by the government means that there must be supports given by the through BUMDes brought an effect on the human resources in managing and strengthening economy of rural communities as measured
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