Can Government Money and Foreign Capital Reduce Poverty? Evidence From ASEAN Countries

Muhammad Farras Nasrida; Fadeli Yusuf Afif; Suherman; Abdul Halim

doi:10.23960/ijebe.v9i1.413

Muhammad Farras Nasrida Faculty of Economics and Business, University of Palangka Raya
Fadeli Yusuf Afif Faculty of Economics and Business, University of Palangka Raya
Suherman Faculty of Economics and Business, University of Palangka Raya
Abdul Halim Faculty of Economics and Business, University of Palangka Raya

DOI: https://doi.org/10.23960/ijebe.v9i1.413

Keywords: ASEAN, FDI, Government Spending, Poverty, and Robust Least Squares.

Abstract

This study aims to analyze the effects of government spending, foreign direct investment (FDI), labor, and economic growth on poverty levels in eight ASEAN countries during the period 2014–2023. Poverty in this study is proxied through household consumption, and the estimation model uses panel data regression with the Robust Least Squares (M-estimation) approach to address violations of classical assumptions such as residual non-normality. The estimation results show that government spending and economic growth have a positive and significant effect on household consumption, indicating their contribution to reducing poverty levels. In contrast, FDI and labor do not show a significant effect on household consumption. These findings indicate that the effectiveness of government spending and the quality of economic growth are key to poverty alleviation in the ASEAN region, while the benefits of FDI and increased labor require a more targeted and inclusive policy approach.

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