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Can Social Capital Investment Reduce Poverty in Rural Indonesia?

Author

Listed:
  • Ernan Rustiadi

    (Faculty of Agriculture, Bogor Agricultural University, Indonesia,)

  • Ahmadriswan Nasution

    (Education and Training Center, BPS-Statistics Indonesia, Indonesia.)

Abstract

This study investigates the impact of social capital investment on the poverty of rural households in Indonesia using nationally representative datasets, namely Susenas 2012. Employing a logistic regression model to examine the effect of social capital on household poverty, this study tests whether the ownership of social capital reduces households' probability of being poor. The analysis shows that the effect of social capital on decreasing the probability of a rural household being poor is higher than that of human capital. The findings imply that, compared to other factors, social capital is the most important in reducing household poverty. Therefore, government agencies, the private sector, and other stakeholders should encourage investment in households' social capital to accelerate poverty reduction in Indonesia, complementary to other forms of conventional capital accumulation.

Suggested Citation

  • Ernan Rustiadi & Ahmadriswan Nasution, 2017. "Can Social Capital Investment Reduce Poverty in Rural Indonesia?," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 109-117.
    • Handle: RePEc:eco:journ1:2017-02-15
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    More about this item

    Keywords

    Poverty; Social Capital; Rural Household; Indonesia; Logistic Regression;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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