How Public and Private Investment Reduces Poverty: A Case Study of Provinces with Nickel Production in Indonesia

Abstract

This study aims to determine the impact of government and private investment on poverty rates in Indonesia’s nickel-producing provinces (South Sulawesi, Central Sulawesi, Southeast Sulawesi, and North Maluku). By utilizing the panel data analysis approach from 2013 to 2022, we can observe how the realization of Foreign Investment (PMA), Domestic Investment (PMDN), and Government Investment (BM) affects poverty reduction. The study’s findings suggest that Domestic Investment (PMDN) has considerable impact on poverty reduction. Meanwhile, the realization of Foreign Investment (PMA) and Government Investment (BM) had no substantial impact on poverty reduction in nickel-producing provinces. Along with the increase in the amount of foreign investment and government investment in nickel-producing provinces in Indonesia, research shows that the results do not have a significant effect on alleviating poverty in these nickel-producing provinces. So investment must be encouraged to be more inclusive or encourage labor-intensive investment. The government and corporate sector can utilize this information to help determine the direction of investment in Indonesia’s nickel-producing provinces. Keywords: poverty, foreign direct investment, domestic direct investment, public investment