Can Social Capital Investment Reduce Poverty in Rural Indonesia?

Ernan Rustiadi and Ahmadriswan Nasution
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Ernan Rustiadi: Faculty of Agriculture, Bogor Agricultural University, Indonesia,
Ahmadriswan Nasution: Education and Training Center, BPS-Statistics Indonesia, Indonesia.

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 2, 109-117

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.

Keywords: Poverty; Social Capital; Rural Household; Indonesia; Logistic Regression (search for similar items in EconPapers)
JEL-codes: C13 I32 R58 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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