Exploring the relationship between spatial factors and poverty in Indonesia based on macroeconomics: A look at Java Island

Poverty is not only a problem within a region but also a problem that affects multiple regions. The current efforts to alleviate poverty have primarily focused on the household and community level, often neglecting the crucial role that spatial dimensions play in understanding poverty dynamics. The theory of the vicious circle of poverty still needs attention from the whole community and the government, because Indonesia is committed to alleviating poverty. This study examines the significance of spatial considerations in poverty alleviation efforts across 117 districts on Java Island. The research aims to provide recommendations for poverty alleviation policies considering spatial dimensions, including regional conditions and interactions. It was found that almost all macroeconomic variables are spatially dependent, except inflation and health spending. The Moran I measure revealed that the spatial correlation was considerable. It was determined by utilizing spatial econometric techniques. Specifically, with the spatial autoregressive and spatial Durbin model methods, poverty incidence on Java Island highly depends on spatial factors. The study indicated that investing in education in neighboring areas and growing industrial sectors considerably lower poverty within a specific district. The report recommends that policies be executed in a coordinated manner to effectively reduce poverty on Java Island, focusing on industrial and human development through education spending. The spatial network parameters indicate that the impact of these variables is still relatively small, but the effect is specific and accurate. Based on the study’s results, several suggestions for addressing poverty in Java are provided. The government should improve the connections between different areas (provinces, districts, and cities) to increase access among regions.