Human Development and Poverty in Papua Province (An Analysis of Simultaneous Approach on Panel Data Regression)

Recently, development orientation shifted from economic development which only focuses on simply economics growth to be human-oriented development. From some previous researches, one of the indicators used to measure the success rate of development of a society is the Human Development Index (HDI). HDI value already created by the United Nations for Development Programme in 2010 and had ranked Indonesia at 108 of 169 countries with a HDI score of 0.600. This score is better than the score in 2009 of 0.593, with a rank at 111.Indonesia known as big country in the world, either in size or in population (has around 235 million population in this 2012). This population spread or scattered in 34 provinces. From those 34 provinces, there are still many provinces are categorized as underdeveloped provinces but Papua province is debatable, due to its tremendous natural sources. This study is aim to analyze the two-way relationship between HDI and Poverty Level in Papua Province. In addition, other relevant variables are also analyzed in this study and their impact on the both main variables. Its formulation described as follow: (i). the impact of fitted Poverty Level; government expenditure for education, government expenditure for health, and economics function toward HDI; and (ii). the impact of fitted HDI, population growth, and open unemployment toward Poverty Level.This study uses secondary data from Statistical Central Bureau and also from Finance Ministry. The method used in this study is simultaneous approach 2SLS manual on panel data model fixed effect in 20 districts and cities in Papua Province from the period of 2007-2011. Result on HDI equation shows that only economics function has positive and significant impact on HDI, while poverty level, government expenditure for education and health function have no impact on HDI. Meanwhile, the analysis on Poverty Level equation shows that fitted HDI has negative and significant effect on Poverty Level, population growth has positive and significant and open unemployment has positive and insignificant impact on Poverty Level. It can be concluded that there are no good policies in government expenditure and also there are a high level of poverty as well as population growth in Papua province.Based on the result of estimation of both equations, HDI has negative and significant impact on poverty level, the opposite way is the same as well, poverty level has negative and significant impact on HDI. Therefore, this study supports the statement that there is two-way relationship and negative impact between HDI and Poverty Level. The proposed of managerial implication is that effects to reduce poverty level should be done hand in hand with effort to increase human development because human capacity is a determining factor for someone’s ability to free themselves out of poverty trap.