The Impact of Government Spending on Health and Education on the Human Development Index in Eastern Indonesia: A Panel Data Regression Analysis for 2015–2024

Abstract

This study analyzes the effects of government spending on health, government spending on education, economic growth, and poverty rates on the Human Development Index (HDI) in Eastern Indonesia during the 2015–2024 period. The study uses balanced panel data consisting of 10 provinces with 100 observations. Estimations were performed using panel data regression approaches via the Common Effects Model, Fixed Effects Model, and Random Effects Model. Model selection based on the Chow test, Breusch–Pagan Lagrange Multiplier test, and Hausman test indicated that the Fixed Effects Model was the most appropriate specification. Diagnostic tests identified the presence of heteroscedasticity, autocorrelation, and cross-sectional dependence; therefore, parameter estimates were calculated using Driscoll–Kraay robust standard errors to ensure consistent inferences. The results show that education spending has a significant negative effect on the HDI, while the poverty rate also has a significant negative effect on the HDI. Conversely, health spending and economic growth do not show a significant effect. These findings indicate that improvements in the HDI in Eastern Indonesia are determined not only by the level of public spending but also by the effectiveness of budget allocation and socioeconomic conditions across provinces.