Optimum: Jurnal Ekonomi dan Pembangunan

Environmental risk, natural disasters, and economic growth management in Indonesia: A satellite-based analysis

2026-04-02T00:18:13+00:00

This study examines how environmental risk and natural disasters affect economic performance in a disaster-prone emerging economy. It focuses on the short-run and long-run impacts of flood exposure, forest loss, and spatial economic expansion on Indonesia’s economic growth, with implications for investment stability and growth management. The study integrates satellite-based indicators of flood exposure, forest loss, and night-time light intensity with national time-series macroeconomic data for Indonesia over the period 1960–2024. These variables are analyzed using a dynamic time-series framework to capture both short-run adjustments and long-run equilibrium relationships between environmental risk and economic performance. The results show that environmental factors affect economic performance in differentiated ways. Forest loss exhibits a statistically significant long-run association with economic growth, reflecting the continued role of land conversion and resource utilization in Indonesia’s development process. In contrast, disaster-related indicators do not display robust long-run negative effects at the aggregate level, suggesting that adaptive mechanisms such as reconstruction activity and economic diversification mitigate their macroeconomic impact. Short-run effects of environmental variables are generally limited. This study contributes to the business and management literature by reframing environmental risk as a structural constraint on economic performance and investment stability. By integrating satellite-based environmental data into macroeconomic analysis, it provides a novel, management-oriented framework for assessing disaster-related economic risk in emerging economies.

Comparing borrower-based and institution-based tools: Regulatory trade-offs in the pursuit of innovation-led growth

2026-04-08T05:03:21+00:00

This study examines the "stability paradox" in 18 Asian economies (1990-2024), focusing on how rules like Reserve Requirements (RR) and Loan-to-Value (LTV) affect the innovation-growth relationship. Using FE-DK and FE-2SLS methods to ensure reliability, the results identify a paradox between innovation and growth, where new patents initially slow growth due to high catch-up costs. Most importantly, tightening financial rules—especially RR—triggers a stability paradox by weakening the synergy between innovation and progress. This occurs because RR drains the pool of available lending and causes risk filtering, in which banks favor safe sectors over innovative ones. These findings suggest that Asian authorities must balance financial safety with economic renewal to avoid stifling long-term technological progress.

Analysis the effect of digital economy on income inequality: A study on six ASEAN countries

2026-02-17T01:07:59+00:00

The rapid development of the digital economy has reshaped labor markets and income distribution, raising concerns over whether digitalization exacerbates or reduces income inequality. While technological progress is often associated with skill-biased effects, digital technologies may also broaden access to markets, information, and economic opportunities, particularly in developing regions such as ASEAN. This study examines the impact of digital economy on income inequality in ASEAN countries and assesses whether the relationship follows a non-linear (U-shaped) pattern. Using panel data from six ASEAN countries (Indonesia, Malaysia, Singapore, Thailand, Vietnam, and Philippines) over the period 2010–2020 (66 country-year observations), the analysis employs fixed-effects panel regression models. A quadratic specification is estimated to test for non-linearity, and potential endogeneity is addressed using a two-stage least squares (2SLS) approach with telecommunication-based instrumental variables. The empirical results indicate that digital economy has a negative and statistically significant effect on income inequality, suggesting an equalizing impact across ASEAN countries. The findings imply that digitalization reduces income inequality by expanding access to digital infrastructure and economic participation, thereby enhancing labor market inclusion and income opportunities for low- and middle-income groups. However, no robust evidence of a non-linear (U-shaped) relationship is found, as the estimated turning point lies outside the observed data range.

Village fiscal transfers and poverty alleviation in Java: Evidence from panel data analysis

2026-06-26T12:02:06+00:00

Poverty remains a persistent challenge in economic development and a central concern of Sustainable Development Goal 1. Although previous studies have examined the relationship between village fiscal transfers and poverty, most focus on a single transfer instrument and rarely assess village funds, village fund allocation, and local tax and retribution revenue sharing simultaneously over an extended period. This study examines the association between these three fiscal transfer instruments and poverty across 79 districts in Java from 2016 to 2023 using a balanced eight-year panel dataset. A fixed-effects model is employed, supported by descriptive statistics, panel-data diagnostic tests, hypothesis testing, and robustness checks. The results show that all three fiscal transfer instruments are significantly and negatively associated with poverty. village funds exhibit the strongest association, with a coefficient of -0.109, followed by local tax and retribution revenue sharing (-0.036) and village fund allocation (-0.014). The model is jointly significant, with an F-statistic of 173.344 (p < 0.001), while the adjusted R-squared of 0.957 indicates strong overall model fit, although part of this explanatory power reflects unobserved, time-invariant district characteristics captured by fixed effects. The negative associations remain robust after correcting for cross-sectional dependence using robust standard errors and after separate estimations for the pre- and post-COVID-19 periods. These findings suggest that strengthening village fiscal transfers, particularly village funds, alongside improved governance, transparency, accountability, and community participation, can support poverty reduction and help narrow regional disparities across Java. The study provides empirical evidence for designing more effective and equitable intergovernmental fiscal policies.

Income analysis and the contribution of shallot farming to farm household income in Dringu district, Probolinggo regency

2025-10-08T10:14:50+00:00

Shallots are a horticultural commodity that is a leading product in Dringu District, Probolinggo Regency. Farmers' income does not only come from shallot farming (on farm), but also from side businesses outside of farming (off farm) and outside of the agricultural sector (non-farm), which can help increase household income. The objective of this study was to analyze the income from shallot farming, its contribution to farmers’ household income, and the factors that influence shallot farming income in Dringu District, Probolinggo Regency. This study used a quantitative, descriptive survey method. The sampling method used stratified random sampling by land area, with a population of 1908 farmers, and a 5% sample was drawn from each stratum, resulting in 95 farmers. The research data were collected through interviews and field observations. The data analysis of farming income and household income contribution was conducted mathematically. The results of the study show that the income from shallot farming is Rp. 71,602,647 every planting season for a land area of 0.6 hectares, which indicates that there is a profit from farming. Shallot farming accounted for 89.9% of farmers' total household income, indicating that their livelihoods mainly depend on this activity. Collectively and partially, the variables of education level, production, land area, price, farming experience, number of dependents, and side jobs significantly influence shallot farming income. This requires regular training and mentoring to enable farmers to maintain their achieved income.

Economic viability of closed house and open house systems among medium-scale broiler farms in Malaysia

2026-05-24T12:11:21+00:00

Broiler production is a major contributor to Malaysia’s livestock industry, accounting for approximately 52% of total national livestock production. However, rising feed prices and increasing production costs have intensified the need for more efficient and financially sustainable production systems. This study evaluates the economic viability and operational efficiency of the Closed House System (CHS) and the Open House System (OHS) using projected cash flow analysis and partial budgeting. Primary data were collected through face-to-face interviews with three medium-scale commercial broiler farms, each managing 25,000–30,000 birds per production cycle. Financial feasibility was evaluated over a 35-year project horizon using a 10% discount rate. The findings indicate that CHS requires substantially higher initial capital investment than OHS but provides greater production capacity due to lower floor space requirements (0.7–0.9 ft² per bird) compared with OHS (1.0–2.0 ft² per bird), enabling annual production of approximately 185,714 birds compared with 100,000 birds under OHS. Operationally, CHS demonstrated superior performance, recording lower mortality (<5%), reduced labour costs (RM0.25 per bird compared with RM0.47 under OHS), and improved production efficiency. Financial analysis confirmed that both systems were economically viable, with positive Net Present Values (NPV) and Internal Rates of Return (IRR) exceeding 25%. Nevertheless, CHS exhibited stronger financial performance, achieving an NPV of RM2,392,982 and a payback period of 3.5 years. Despite its higher initial investment, CHS offers superior long-term profitability, greater resource utilization, and improved production efficiency, making it a more sustainable and competitive housing system for medium-scale broiler production in Malaysia while providing empirical evidence to support investment and policy decisions on broiler housing modernization.

Green tourism and sustainable development in ASEAN-5: Evidence from panel data

2026-04-16T01:04:18+00:00

Tourism plays an important role in supporting sustainable development in ASEAN; however, its expansion can also generate environmental pressures that may undermine long-term sustainability. Green tourism offers an approach to balancing tourism development with environmental conservation and resource efficiency. This study examines the relationship between green tourism and sustainable development in five ASEAN countries—Indonesia, Malaysia, Singapore, Thailand, and Vietnam—during the 2006–2021 period. Green tourism is proxied by the Environmental Performance Index (EPI), Travel and Tourism Development Index (TTDI), and Renewable Energy Consumption (REC), while Gross Domestic Product (GDP) is included as a control variable. The Sustainable Development Index (SDI) is used as the dependent variable. Using panel data regression, the Fixed Effects Model (FEM) is selected as the most appropriate estimation approach. The results indicate that EPI and TTDI have positive and statistically significant relationships with SDI, suggesting that stronger environmental performance and tourism development are associated with higher levels of sustainable development. In contrast, REC and GDP show negative and statistically significant relationships with SDI. These findings highlight the importance of strengthening environmental governance, improving sustainable tourism competitiveness, and accelerating the transition toward cleaner energy systems. The study provides empirical evidence that can support policymakers in designing integrated tourism and environmental strategies to advance sustainable development across ASEAN-5 countries.

Global commodity price shocks and Indonesia’s exchange rate dynamics during the Russia-Ukraine conflict: A VECM analysis

2026-02-18T23:03:23+00:00

The Russia–Ukraine conflict has disrupted global commodity markets, particularly crude oil, natural gas, wheat, and corn, leading to increased price volatility and affecting exchange rate dynamics. This study aims to analyze the Granger-causal relationship between global commodity prices and the USD/IDR exchange rate using the Vector Error Correction Model (VECM). Monthly data from November 2013 to September 2023 are employed to examine both short-run dynamics and long-run equilibrium relationships. The results show that, in the long run, crude oil prices have a negative relationship with the USD/IDR exchange rate, indicating an appreciation of the Indonesian Rupiah, while natural gas, wheat, and corn prices have positive effects, contributing to currency depreciation. In the short run, only crude oil prices significantly influence the exchange rate. The Granger causality test reveals a unidirectional relationship from crude oil prices to the exchange rate. Furthermore, the model demonstrates high predictive accuracy, with MAPE values of 1.54% (exchange rate), 6.91% (crude oil), 10.54% (natural gas), 6.92% (wheat), and 4.50% (corn). These findings highlight the dominant role of energy commodities and confirm that global commodity shocks significantly influence exchange rate movements, providing important insights for policymakers in managing economic stability.

Village funds and poverty reduction in South Sumatra: A geographically weighted regression analysis

2026-07-18T11:22:07+00:00

Poverty alleviation is the main agenda of development programs in Indonesia. Most of the implemented programs are non-spatial in nature and thus not yet optimal. This study looks into spatial patterns and area-based approaches to reducing poverty in South Sumatra Province. The geographically weighted regression (GWR) method using poverty data from 2022-2024 was employed in this study. The study finds an assembled spatial poverty pattern where areas (sub-districts) with high poverty levels are surrounded by regions with high poverty levels. Therefore, the poverty alleviation strategy of each region is aligned with each influencing factor.

Does regional competitiveness promotes economic growth?

2026-02-11T07:54:44+00:00

The relationship between regional competitiveness and economic growth is often assumed to be positive and mutually reinforcing. However, empirical evidence at the sub-provincial level, particularly in developing regions with heterogeneous economic structures, remains limited and inconclusive. This study examines the effects of industrial value added, infrastructure, regional competitiveness, and district/city minimum wages on Gross Regional Domestic Product (GRDP) across districts and cities in Central Java during the period 2022–2024. Using panel data regression and employing the Fixed Effect Model based on Chow and Hausman test results, this study finds that industrial value added and minimum wages exert a positive and statistically significant effect on GRDP, underscoring the importance of real economic activity and household purchasing power in driving short-run regional growth. Infrastructure shows a positive but statistically insignificant effect, while regional competitiveness exhibits a negative and significant relationship with GRDP. These findings suggest that improvements in competitiveness indicators do not always translate into immediate economic gains, particularly when structural readiness and sectoral integration remain uneven. This study contributes to the regional development literature by providing district-level evidence that challenges the conventional assumption of competitiveness-led growth and highlights the dominance of tangible economic factors in shaping short-term regional economic performance.

Analyzing the impact of Indonesia’s mineral export policy using input-output tables

2025-11-24T04:01:09+00:00

Indonesia is a country with abundant mineral resources, which makes a major contribution to the national economy, especially through its export sector. Over the past two decades, the mining sector has consistently contributed an average of 9.77% to the national Gross Domestic Product (GDP). However, the implementation of the raw mineral ore export ban policy led to a decline in the volume and value of mining commodity exports, which directly impacted the sector's contribution to GDP and the national export structure. The policy requires the processing and refining of minerals to be carried out domestically before they can be exported, as an effort to encourage downstreaming and increase added value. This study aims to analyse the impact of the mineral export ban policy on the national economy and examine the linkages between the mining sector and other sectors through the Input-Output (I-O) approach. The method used in this research is Input-Output (I-O) analysis using the 2020 Indonesian I-O Table, which has been aggregated into 29 sectors. The results reveal that the export ban generated a substantial contraction in national output, particularly in coal, manufacturing, transport, and mining services sectors, indicating that downstream capacity remains structurally insufficient. This study contributes by providing updated empirical evidence on the structural constraints of Indonesia’s mineral downstreaming strategy and by demonstrating that export restrictions alone are inadequate without parallel expansion of domestic processing infrastructure and intersectoral coordination.