How Education and Health Spending Help Reduce Poverty in Indonesia

What is it about?

Reducing poverty remains a major challenge in many parts of Indonesia. Governments invest large amounts of public money in education and health, but it is not always clear whether this spending is being used effectively to improve people’s lives. This study explores how well education and health budgets contribute to poverty reduction across Indonesia. Rather than focusing only on how much money is spent, the research looks at how efficiently public funds are used to support better outcomes. It examines differences across regions and over time to understand whether spending on schools, healthcare, and related services is associated with lower poverty levels. The findings show that education and health spending can help reduce poverty when resources are managed and targeted effectively. Investments that improve access to quality education and basic health services are more likely to support long-term improvements in income and well-being. However, the study also highlights that increased budgets alone are not enough. Weak implementation, unequal access, and limited local capacity can reduce the impact of public spending. Overall, this research suggests that poverty reduction requires not only sufficient funding, but also better planning, coordination, and accountability in how education and health budgets are used. The results provide useful insights for policymakers and development practitioners seeking to make public spending more effective and equitable.

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Photo by Syahrul Alamsyah Wahid on Unsplash

Photo by Syahrul Alamsyah Wahid on Unsplash

Why is it important?

Reducing poverty remains a major challenge in Indonesia, despite continued public investment in education and health. This study examines how education and health spending contribute to poverty reduction, with particular focus on the efficiency with which public funds are used, rather than on the amount spent. What makes this article unique is its emphasis on spending effectiveness rather than budget size alone. While many discussions focus on increasing public budgets, this study shows that the allocation and management of resources play a critical role in achieving meaningful poverty reduction. By examining differences across regions, the research highlights how similar levels of spending can produce very different outcomes depending on local capacity, planning, and implementation. The study is also timely. As governments face tighter fiscal constraints and rising demands for social services, especially in the post-pandemic period, there is growing pressure to ensure that public spending delivers measurable results. Understanding how education and health budgets can be used more efficiently is, therefore, highly relevant to current policy debates. The findings suggest that well-managed investments in education and health can help reduce poverty, but only when supported by strong institutions and accountability. By shifting attention from spending levels to spending quality, this article offers practical insights for policymakers and practitioners seeking to design more effective, equitable, and sustainable poverty reduction strategies.

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