Innovation-Driven Economic Development for Inclusive Well-being: Assessing Household Resilience to Economic Shocks

-

In modern economies, innovation is a critical driver of economic growth and societal well-being. The capacity of an innovation-driven economy to enhance household resilience, particularly in the face of economic shocks, is essential for equitable prosperity. This study investigates the determinants necessary for households to better withstand and recover from economic disruptions, highlighting the importance of inclusive economic strategies.

The Role of Innovation

Innovation is fundamental to rising living standards. Productivity growth, which is vital for increasing real wages and per capita income, largely stems from continuous innovation. The McKinsey Global Institute and Boston Consulting Group emphasize that innovation surpasses other inputs, such as capital and labor, in driving productivity growth. Harvard economist Elhanan Helpman also supports this view, noting that innovation is a significant driver of productivity and, consequently, cross-country income variations. An innovative economy fosters regional vitality, quality of life, and social inclusion. However, it is crucial to prepare households for sudden economic downturns, as seen during the COVID-19 pandemic.

Household Wealth as a Financial Buffer

Traditional measures of household well-being, such as income, have limitations. Income can be understated due to various factors, while expenditure often overestimates living standards. Household wealth—encompassing property, savings, and other assets—provides a more accurate measure of financial stability and resilience during crises. However, household wealth must account for debts, which can reduce overall net wealth. Analyzing household wealth across different income classes reveals varying impacts of demographic, educational, and economic factors on financial stability.

Quantile Regression Analysis

The study, "The Determinants of Household Net Wealth in Indonesia: Application of Quantile Regression," uses quantile regression to explore how household wealth is influenced by various factors across different wealth classes. Unlike ordinary least squares (OLS) methods that provide an average estimate, quantile regression offers a comprehensive view of the relationship between household characteristics and net wealth, capturing variations across the distribution.

Findings and Implications

1. Household Size: In urban areas, larger household sizes negatively impact net wealth, with significant effects observed in higher quantiles. In rural areas, this negative impact is evident in lower quantiles. Larger households may face financial challenges due to higher living costs and reduced wealth accumulation. To address this, reinforcing family planning programs and improving access to healthcare services are essential.

2. Education: In both urban and rural areas, higher levels of education positively impact household wealth. The effect is more pronounced in higher quantiles, suggesting that education increases earning potential and financial stability. Investments in education, including increased government spending and improved access to quality education, can enhance household wealth, particularly for lower-income households.

3. Intergenerational Transfers: Financial assistance from older generations positively influences household wealth. Transfers of money can enhance financial stability, allowing families to invest in property and other assets. To maximize the benefits of intergenerational transfers, government subsidies and direct transfers can alleviate financial stress and promote wealth accumulation.

4. Employment in Agriculture: Agricultural employment negatively impacts net wealth, especially in rural areas. The benefits of agriculture are often concentrated among wealthier individuals who own land and access technology, while poorer households, lacking land, face economic disadvantages. To address this inequality, policies should focus on land redistribution, increased access to technology, and improved financial services for smallholders.

Conclusion

Household net wealth is crucial for financial resilience during crises. However, wealth accumulation varies across different income classes, leading to disparate abilities to cope with economic shocks. Tailored interventions are necessary to address these disparities, ensuring that economic development and innovation benefit all societal levels and contribute to inclusive well-being. By focusing on education, family planning, and equitable economic policies, societies can enhance household resilience and achieve sustainable prosperity (TS).

 

A longer version of this article is presented at Business, Economics, and Sustainability Sciences (BESS) 2024: Innovation-Driven Economic Development to Achieve an Inclusive Well-being. Malang, 27-28 August 2024

Popular posts from this blog

Skewness dan Kurtosis

-
Image
Pada statistika, dikenal istilah skewness dan kurtosis. Skewness adalah ukuran ketidaksimetrisan dalam distribusi nilai. Skewness dapat bernilai positif, negatif, dan nol. Skewness yang bernilai positif berarti ekor distribusi berada di sebelah kanan nilai terbanyak. Berarti, sebagian besar distribusi berada di nilai rendah. Skewness yang bernilai negatif berarti ekor distribusi berada di sebelah kiri, menunjukkan bahwa sebagian besar nilai berada di sisi kanan kurva. Sementara skewness bernilai nol berarti nilai terdistribusi secara simetris, dengan jarak antara ekor distribusi sebelah kanan dan kiri sama besar. Sumber: https://en.wikipedia.org/wiki/Skewness Kurtosis adalah indikator untuk menunjukkan derajat keruncingan ( tailedness ). Semakin besar nilai kurtosis maka kurva semakin runcing. Nilai referensi kurtosis adalah 3. Jika nilai kurtosis lebih besar dari 3, maka kurva distribusi disebut leptokurtik. Sementara jika lebih rendah dari 3, maka disebut platikur
Read more

"Interprovincial Wealth Inequality by Factor Components in Indonesia", Published in the Bulletin of Indonesian Economic Studies (BIES)

-
Image
Finally published! Our paper titled Interprovincial Wealth Inequality by Factor Components in Indonesia in collaboration with Susan Olivia and Les Oxley (the University of Waikato, New Zealand) is finally published at the Bulletin of Indonesian Economic Studies (BIES) Volume 60, 2024 - Issue 2 The Bulletin of Indonesian Economic Studies (BIES) is the leading journal on Indonesia’s economy and society. It aims to address not only economic analysis and policy but also the intersection between economics, development, and area studies. In doing so, it plays an important role in helping the world—including Indonesians themselves—to better understand Indonesia. BIES has been published continuously since 1965. Bulletin of Indonesian Economic Studies (BIES) is published by Indonesia Project, Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Asia and the Pacific, The Australian National University To cite this article: Soseco, T., Olivia, S., & Oxley, L
Read more

KKN di Desa Penari

-
Image
KKN di Desa Penari is a horror story that goes viral recently in Indonesia. This story is believed based on the real story of KKN programme in one village in East Java Province in 2009. The KKN is an abbreviation of Kuliah Kerja Nyata or translated as practical experience of community service conducted by university students. While Desa Penari is translated as a village of dancers.  The story was originally published in a serial tweet by SimpleMan in his Twitter account @SimpleM81378523, uploaded on the 24th of June 2019. The tweets are written in the local language (Javanese with eastern Java dialect) with translation in the Indonesian language.  The story focuses on six (out of 14) students who did the KKN programme in a remote village, known with traditional dance as its tradition. When they arrived at the village, they realised that the village is also inhabited by ancient spirits, with traditional dance as their tradition.  The story culminated when a couple did an unacceptabl
Read more

IFLS: Mencari Variabel

-
Image
RAND Indonesian Family Life Survey (IFLS). Sumber: Google The Indonesia Family Life Survey (IFLS) merupakan sumber data longitudinal yang banyak digunakan peneliti untuk mengetahui kondisi sosioekonomi, kesehatan, pendidikan untuk rumah tangga dan individu di Indonesia serta kondisi komunitas dalam hal karakteristik, fasilitas pendidikan, dan kesehatan.  IFLS pertama kali diselenggarakan tahun 1993 (IFLS1) yang menyurvei 7.224 rumah tangga yang tinggal di 321 Enumeration Area di 13 provinsi di Indonesia. Kemudian survei-survei berikutnya dilaksanakan di tahun 1997 (IFLS2), 2000 (IFLS3), 2007 (IFLS4), dan 2014 (IFLS5). Berbeda dengan cross section survey yang mengumpulkan informasi responden pada suatu saat tertentu, longitudinal atau panel survey mengumpulkan informasi dari responden yang sama dari waktu ke waktu.  Data, publikasi dan dokumentasi penunjang IFLS tersedia di website RAND Identifier (ID) di IFLS Ada berbagai macam identifier (ID) di IFLS, yakni ID untuk rumah tangga ( hou
Read more

Panduan Penulisan Tugas Akhir

-
Image
Penulisan tugas akhir membutuhkan konsistensi dalam pengerjaannya untuk mendapatkan hasil terbaik dalam jangka waktu yang telah ditentukan.  Untuk itu, beberapa hal berikut diperlukan sebagai panduan pengerjaan tugas akhir. Pertama , buat time line projek. Untuk hal ini, peneliti perlu membuat deadline kapan mau menyelesaikan setiap tahap penelitian atau setiap bab. Buatlah jadwal mingguan atau bulanan untuk setiap tahapan penelitian, seperti contoh berikut. Dan jangan lupa, jadwal ini harus ditaati.   Kedua , projek harus terus menerus "dikunjungi" dan dipoles secara berkala. Peneliti perlu menulis atau menambahkan gagasan atau ide baru setiap periode waktu tertentu, meski hanya satu atau dua paragraf.  Perlu mengirim progress projek setiap bulan.  Perlu juga mengirim laporan kemajuan (progress report ) setiap bulan.  Progress report tersebut setidaknya berisi apa yang sudah dikerjakan, apa yang mau dikerjakan, kendala yang dihadapi, dan sebagainya. Ketiga , gunakan surat el
Read more

Peta Kemiskinan Kabupaten Malang

-
Image
Kabupaten Malang memiliki persentase penduduk miskin yang tergolong rendah di Indonesia atau di antara kabupaten/ kota lain di Provinsi Jawa Timur. Pada tahun 2021, angka kemiskinan di Kabupaten Malang mencapai 10,50%. Sementara kabupaten/ kota dengan tingkat kemiskinan tertinggi di Jawa Timur adalah Sampang (23,76%), Bangkalan (21,57%), dan Sumenep (20,51%) Namun bila dilihat dari angka absolut, Kabupaten Malang tergolong dalam jajaran kabupaten/ kota yang memiliki jumlah penduduk miskin terbanyak di Indonesia dengan jumlah penduduk miskin 276,58 ribu jiwa pada tahun 2021. Jumlah ini menempatkan Kabupaten Malang di posisi keempat nasional, sementara posisi pertama kabupaten/kota dengan jumlah penduduk miskin terbanyak tahun 2021 adalah Kabupaten Bogor dengan jumlah penduduk miskin 491,24 ribu jiwa kemudian disusul Kabupaten Brebes (314,95 ribu jiwa) dan Kabupaten Garut (281,36 ribu jiwa). Gambar 1 . Peta Kemiskinan Provinsi Jawa Timur, 2015 Banyaknya jumlah penduduk miskin di Kabupate
Read more

Piramida Distribusi Kekayaan Masyarakat Indonesia

-
Image
Menarik mencermati pemberitaan detikcom (19/10) yang berisi pernyataan bahwa hanya 1% masyarakat Indonesia yang menikmati kekayaan sementara 99% sisanya hidup pas-pasan bahkan sangat sulit. Sontak, berita ini menjadi perhatian publik.  Pertanyaan yang muncul berikutnya adalah bagaimana sebenarnya kondisi kehidupan mereka yang tidak termasuk dalam kelompok elit 1% ini. Apakah semuanya hidup pas-pasan? Tentu saja, pengamatan atas kondisi mereka sangat sulit. Akan lebih mudah mengamati atau mengukur orang-orang yang berada di kelompok ekstrem atas (orang yang sangat kaya) atau ektrem bawah (orang yang paling miskin).  Orang-orang yang masuk ke dalam 1% orang terkaya di Indonesia adalah mereka memiliki harta atau aset yang sangat banyak.  Artikel ini difokuskan pada kekayaan, dan bukannya pendapatan. Kekayaan rumah tangga lebih mampu merefleksikan kondisi kesejahteraan rumah tangga tersebut.  Kamus Besar Bahasa Indonesia juga memberi definisi kaya adalah mempunyai banyak ha
Read more