Does Natural Resource Revenue Contribute to Achieving Inclusive Growth?
DOI:
https://doi.org/10.57125/FEL.2024.12.25.11Keywords:
Economic Development, Human Capital, Education Spending, Panel Data, Kink Threshold ModelAbstract
This study aims to analyse the attainment of inclusive growth and investigate the relationship between the impact of natural resource revenue on inclusive growth and the extent of investment in education. This study utilises data from ten locations in East Kalimantan, spanning 2015 to 2022. This study employs an approach that entails constructing an index by assigning certain weights and doing nonlinear panel data regression. Based on actual evidence, none of the regions in East Kalimantan Province achieved more remarkable inclusive growth between 2015 and 2022. Due to substantial revenue from natural resources, most regions only managed to attain moderately decent inclusive growth. This study makes a new contribution by finding a threshold of education expenditure of 21.18 per cent, which determines the relationship between natural resource revenues and inclusive growth. This finding highlights that education investment has a more significant role than previously understood, especially in regions rich in natural resources. This study contributes to the literature on inclusive economics and natural resource revenue management, as few studies have identified a specific threshold that can alter the impact of natural resource revenues on inclusive growth. The results of this study provide practical guidance for local governments, especially in East Kalimantan Province, in formulating natural resource revenue allocation policies. This finding emphasises allocating many natural resource revenues to the education sector to achieve inclusive growth. Thus, this research becomes an essential reference for formulating policies focusing on human development and economic sustainability in natural resource-rich regions.
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