The Effect of Direct Expenditure for Agriculture Sector and Absorbed Labor on Economic Growth and Poverty Levels in Sumatera Barat Province

Abstract

As one of the basic sectors in Sumatera Barat Province is agricultural sector contributes to the highest GRDP and employment absorption every year. This study aims to explain the effect of direct spending of the agricultural sector and absorbed labor on economic growth and poverty rates in Sumatera Barat Province. This study uses secondary data from 19 (nineteen) regencies/cities in West Sumatra Province from 2015 to 2020 which consist of data on the realization of direct expenditure budgets on agricultural sector SKPD (DPTPH, DPKH, DKP, and the Food Service), the number of workers absorbed agricultural sector, economic growth rate, and poverty rate. This secondary data comes from BPS and BPKAD of Sumatera Barat Province. The data analysis method used is path analysis with panel data. The following results were obtained is; 1) Direct spending on agricultural sector has a significant and positive correlation with economic growth and poverty rates; 2) The number of workers absorbed does not significantly affect either economic growth or the poverty rate; 3) The dummy variable between districts or cities has a significant effect on the poverty rate but does not significantly affect economic growth, and 4) Economic growth has a significant and positive correlation with the poverty rate. Researchers suggest that it is important for the government to evaluate agricultural development programs, especially those related to poverty reduction.