Analysis Dimensions of Globalization and Poverty : Vector Error Correction Model (VECM) Approach
1Qurrota Ayu Nindien, 2Arivina Ratih Yulihar Taher, 3Asih Murwiati, 4I Wayan Suparta, 5Neli Aida
1Master of Economic, Faculty of Economic and Business, University of Lampung, Bandar Lampung, 35141, Indonesia.
2,3,4,5Lecturer of Economics, Faculty of Economic and Business, University of Lampung, Bandar Lampung, 35141, Indonesia
https://doi.org/10.47191/jefms/v7-i6-44
ABSTRACT:
This study analyzes how the dimensions of globalization, economic growth, and income inequality affect poverty with the Vector Error Correction Model (VECM) model in the long term. This research method uses time series data and secondary data. The data used in this study are economic growth rate, Gini ratio index, de facto and de jure economic globalization index, social globalization index (%), and the number of poor people (%) in Indonesia from 1984 to 2020 sourced from BPS, World Bank, and KOF ETH Zurich. The result of this study is the cointegration of the dependent variable, namely poverty, with the independent variables, namely the dimensions of globalization, economic growth, and inequality in Indonesia. Hence, the model chosen in this study is the Vector Error Correction Model (VECM). Economic growth, economic globalization, social globalization, and economic cooperation negatively and significantly affect poverty in Indonesia in the long run. Inequality has a positive and significant effect on poverty in Indonesia in the long run.
KEYWORDS:
Globalization, Poverty, Economic Growth, Inequality
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