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Efficiency Comparison of Pro-Growth Poverty Reduction Spending before and during the COVID-19 Pandemic: A Study of Regional Governments in Indonesia

Author

Listed:
  • Roosemarina Anggraini Rambe

    (Department of Economics, Faculty of Economics and Business, University of Bengkulu, Bengkulu 38371, Indonesia)

  • Purmini Purmini

    (Department of Economics, Faculty of Economics and Business, University of Bengkulu, Bengkulu 38371, Indonesia)

  • Armelly Armelly

    (Department of Economics, Faculty of Economics and Business, University of Bengkulu, Bengkulu 38371, Indonesia)

  • Lizar Alfansi

    (Department of Economics, Faculty of Economics and Business, University of Bengkulu, Bengkulu 38371, Indonesia)

  • Ratu Eva Febriani

    (Department of Economics, Faculty of Economics and Business, University of Bengkulu, Bengkulu 38371, Indonesia)

Abstract

During the COVID-19 pandemic, all regions in Indonesia have had negative economic growth. It also increased the poverty rate in the country. The government must allocate pro-growth and poverty reduction programs to maintain economic growth and simultaneously reduce poverty. This study aims to measure the relative efficiency of pro-growth poverty reduction spending of local governments in seven regions in Indonesia. This study compares the efficiency scores before and during the COVID-19 pandemic from 2015 to 2019 and 2020. The inputs are five types of government spending: education, health, economic, social protection, and infrastructure. The outputs are economic growth and poverty reduction. Data envelopment analysis with an output-oriented model and a return to scale variable approach is applied. The results show that the highest average local government efficiency score was in Kalimantan, with the lowest being in Sulawesi. The efficiency scores of local governments in the COVID-19 pandemic differ between regions: it remained stable in Kalimantan, increased in Java-Bali, Sumatra, and Sulawesi, and experienced a decline in Nusa Tenggara, Maluku, and Papua. The study concludes that economic growth and poverty reduction can simultaneously measure government efficiency. To be relatively efficient, local governments need to consider allocating pro-growth poverty reduction spending to improve the conditions of both outputs.

Suggested Citation

  • Roosemarina Anggraini Rambe & Purmini Purmini & Armelly Armelly & Lizar Alfansi & Ratu Eva Febriani, 2022. "Efficiency Comparison of Pro-Growth Poverty Reduction Spending before and during the COVID-19 Pandemic: A Study of Regional Governments in Indonesia," Economies, MDPI, vol. 10(6), pages 1-14, June.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:6:p:150-:d:842009
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    References listed on IDEAS

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    1. António Afonso & João Tovar Jalles & Ana Venâncio, 2021. "Structural Tax Reforms and Public Spending Efficiency," Open Economies Review, Springer, vol. 32(5), pages 1017-1061, November.
    2. F. Ozlem Alper & Mehmet Demiral, 2016. "Public Social Expenditures and Economic Growth: Evidence from Selected OECD Countries," Research in World Economy, Research in World Economy, Sciedu Press, vol. 7(2), pages 44-51, December.
    3. Ferdi Celikay & Erdal Gumus, 2017. "The effect of social spending on reducing poverty," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(5), pages 620-632, May.
    4. Magdalena Cyrek, 2019. "Government social spending in the EU countries: efficiency in poverty and income inequality reduction," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 14(3), pages 405-424, September.
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