Economic Growth and Inclusivity in Papua in 2021: A Quantitative Approach Using the 2SLS Method

Abstract

Economic growth relies heavily on robust infrastructure development to drive job creation, reduce poverty, and increase per capita income. This study explores the patterns of inclusive economic growth in Papua and the effect of infrastructure on this growth. Using data from 29 regencies and cities in Papua Province and applying simultaneous equations methods, the study finds that infrastructure significantly boosts Gross Regional Domestic Product growth and reduces poverty. Papua's economic growth reached 2.49% in 2021, a notable improvement from -3.4% the previous year. Despite a deceleration in growth, Papua successfully managed to maintain positive economic growth and reduce poverty, inequality, and unemployment between 2019 and 2021. The inclusive nature of this growth has led to more job opportunities and a pro-poor reduction in poverty. Infrastructure development, particularly in roads, plays a vital role in fostering economic growth by enhancing job accessibility and income distribution. The increase in Gross Regional Domestic Product and workforce in Papua is expected to further positively affect the overall economic condition. Therefore, the study emphasizes the necessity for targeted policies to meet regional needs for balanced and sustainable development and highlights infrastructure's crucial role in achieving inclusive economic growth and improving living standards in Papua Province.