Analysis Of The Relationship Between Causality Economic Growth Number Of Population And Income Inequality On Sumatra Island

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Introduction

The island of Sumatra, located in Indonesia, is one of the most populous islands in the world. With a large and growing population, the island faces significant economic and social challenges. One of the key issues facing Sumatra is income inequality, which has been increasing over the years. This study aims to examine the relationship between economic growth, population, and income inequality on the island of Sumatra. Using secondary quantitative data in the form of data panels (pooled data) from 10 provinces in Sumatra during the period 2010 to 2019, the analysis was carried out by the vector Autoregression (PVAR) panel method and the Granger Causality Test panel.

Methodology

The study used a quantitative approach, employing the vector Autoregression (PVAR) panel method and the Granger Causality Test panel to analyze the relationship between economic growth, population, and income inequality on the island of Sumatra. The data used in this study were secondary quantitative data in the form of data panels (pooled data) from 10 provinces in Sumatra during the period 2010 to 2019.

Results

The results of the study showed that economic growth had a negative influence on economic growth in the following years. That is, when a province experiences high economic growth in one year, it is likely that the growth will slow down the following year. This can be caused by various factors, such as limited resources or the presence of saturation effects in growth.

In addition, economic growth turned out to have a positive effect on income inequality and population. The increase in economic growth can attract the migration of the population to a more developed area, which in turn causes income inequality between urban and rural areas to increase. Increasing the population also contributes to income inequality, because more people compete to get limited resources.

Income inequality also has a complex influence. This study found that income inequality had a negative effect on income inequality in the following year. This shows the existence of an adjustment mechanism, where a high level of inequality in the previous year can cause intervention or policy changes that lead to reducing inequality in the following year. However, income inequality can also have a positive effect on economic growth and population. When one group gets a proportion of greater wealth, they can invest more, encouraging economic growth although it can also increase inequality.

The population in a certain period has a negative effect on the number of population in the following year. This phenomenon may indicate migration out of densely populated areas, both for social and economic reasons. Conversely, the population has a positive impact on economic growth but has a negative effect on income inequality. That is, an increase in population can encourage more participation in economic activity, but can also make resources increasingly distributed uneven.

Granger Causality Test

The results of the Granger Causality Test panel show that there is a one-way relationship (unidirectional causality) of the population to economic growth. This shows that an increase in population can be a driving factor for economic growth, not vice versa. In this context, the addition of population can create a larger market and expand labor, all of which contribute to better economic growth.

Conclusion

Overall, this research provides in-depth insight into the dynamics of economic growth, population, and income inequality on the island of Sumatra. Understanding this relationship is important to design policies that are more effective and sustainable, in order to achieve inclusive growth and reduce future income inequality.

Policy Implications

The findings of this study have significant policy implications for the government of Sumatra. Firstly, the government should focus on reducing income inequality by implementing policies that promote economic growth and job creation. Secondly, the government should invest in education and healthcare to improve the quality of life of the population. Finally, the government should implement policies that promote sustainable development and reduce the negative impact of population growth on the environment.

Limitations

This study has several limitations. Firstly, the data used in this study were secondary quantitative data, which may not be representative of the entire population of Sumatra. Secondly, the study only analyzed the relationship between economic growth, population, and income inequality on the island of Sumatra, and did not consider other factors that may influence these variables. Finally, the study only analyzed the data from 2010 to 2019, and did not consider the impact of future events on the relationship between economic growth, population, and income inequality.

Future Research Directions

This study provides several directions for future research. Firstly, future studies should consider the impact of other factors on the relationship between economic growth, population, and income inequality. Secondly, future studies should analyze the data from a longer period to consider the impact of future events on the relationship between economic growth, population, and income inequality. Finally, future studies should consider the impact of policies on the relationship between economic growth, population, and income inequality.

References

  • [1] World Bank. (2020). World Development Indicators.
  • [2] Central Bureau of Statistics. (2020). Statistical Yearbook of Indonesia.
  • [3] Ministry of National Development Planning. (2020). National Development Plan.

Appendix

Q: What is the main objective of this study?

A: The main objective of this study is to examine the relationship between economic growth, population, and income inequality on the island of Sumatra.

Q: What methods were used in this study?

A: This study used the vector Autoregression (PVAR) panel method and the Granger Causality Test panel to analyze the relationship between economic growth, population, and income inequality on the island of Sumatra.

Q: What are the key findings of this study?

A: The key findings of this study are:

  • Economic growth has a negative influence on economic growth in the following years.
  • Economic growth has a positive effect on income inequality and population.
  • Income inequality has a complex influence, with a negative effect on income inequality in the following year, but also a positive effect on economic growth and population.
  • The population has a negative effect on the number of population in the following year, but a positive impact on economic growth.

Q: What are the policy implications of this study?

A: The policy implications of this study are:

  • The government should focus on reducing income inequality by implementing policies that promote economic growth and job creation.
  • The government should invest in education and healthcare to improve the quality of life of the population.
  • The government should implement policies that promote sustainable development and reduce the negative impact of population growth on the environment.

Q: What are the limitations of this study?

A: The limitations of this study are:

  • The data used in this study were secondary quantitative data, which may not be representative of the entire population of Sumatra.
  • The study only analyzed the relationship between economic growth, population, and income inequality on the island of Sumatra, and did not consider other factors that may influence these variables.
  • The study only analyzed the data from 2010 to 2019, and did not consider the impact of future events on the relationship between economic growth, population, and income inequality.

Q: What are the future research directions of this study?

A: The future research directions of this study are:

  • Future studies should consider the impact of other factors on the relationship between economic growth, population, and income inequality.
  • Future studies should analyze the data from a longer period to consider the impact of future events on the relationship between economic growth, population, and income inequality.
  • Future studies should consider the impact of policies on the relationship between economic growth, population, and income inequality.

Q: What are the implications of this study for policymakers?

A: The implications of this study for policymakers are:

  • Policymakers should consider the complex relationship between economic growth, population, and income inequality when designing policies to promote economic growth and reduce income inequality.
  • Policymakers should invest in education and healthcare to improve the quality of life of the population.
  • Policymakers should implement policies that promote sustainable development and reduce the negative impact of population growth on the environment.

Q: What are the implications of this study for researchers?

A: The implications of this study for researchers are:

  • Researchers should consider the complex relationship between economic growth, population, and income inequality when designing studies to examine the relationship between these variables.
  • Researchers should use a variety of methods to analyze the relationship between economic growth, population, and income inequality.
  • Researchers should consider the impact of policies on the relationship between economic growth, population, and income inequality.

Q: What are the implications of this study for the general public?

A: The implications of this study for the general public are:

  • The general public should be aware of the complex relationship between economic growth, population, and income inequality.
  • The general public should support policies that promote economic growth and reduce income inequality.
  • The general public should be aware of the impact of population growth on the environment and support policies that promote sustainable development.