Government spending on health and education does not automatically translate into higher human development in Eastern Indonesia, according to research by Mahrani and Dirmansyah Darwin of Universitas Negeri Makassar. Published in 2026, the study examined 10 provinces over the 2015–2024 period and found that poverty had a strong negative relationship with the Human Development Index (HDI), while education spending showed a significant negative relationship with HDI during the same period. The findings highlight the importance of how public budgets are implemented, not simply how much governments spend.
Why Human Development Remains a Key Issue
The Human Development Index measures progress across three broad dimensions: health, education, and a decent standard of living. For regions with substantial geographical and socioeconomic differences, improving HDI requires more than economic expansion or increases in government budgets.
Eastern Indonesia continues to face challenges involving access to education, healthcare, infrastructure, and basic public services. Differences in geography and development conditions between provinces can affect how effectively public resources are converted into improvements in people's quality of life.
Mahrani and Darwin therefore examined government spending alongside economic growth and poverty. Their approach recognizes that the relationship between public expenditure and human development can vary depending on local conditions, service accessibility, implementation capacity, and the composition of government spending.
How the Research Was Conducted
The researchers analyzed data from 10 provinces in Eastern Indonesia covering 2015–2024, producing 100 province-year observations.
The study relied on official Indonesian government data. Information on HDI, economic growth, and poverty came from the Central Statistics Agency (BPS), while data on actual government spending for health and education came from the Directorate General of Fiscal Balance (DJPK), Ministry of Finance of the Republic of Indonesia.
The researchers compared different statistical models to identify the approach most suitable for the provincial data. After a series of tests, the Fixed Effects Model was selected. Additional statistical checks found differences in data variation, relationships across time, and interdependence between provinces. The researchers therefore used a robust statistical adjustment known as Driscoll–Kraay standard errors to make the interpretation of the results more reliable.
Four Important Findings
The analysis produced four major findings concerning health spending, education spending, economic growth, and poverty.
1. Health spending had a positive but statistically insignificant relationship with HDI.
Government health expenditure recorded a coefficient of 0.773, but its statistical significance was not sufficient, with a p-value of 0.133. This means that higher health spending was associated with a positive direction in the data, but the researchers could not establish a statistically significant relationship with HDI during the period examined.
The researchers caution that this result should not be interpreted as meaning health spending has no value. Improvements in health infrastructure, availability of health workers, preventive programs, and healthcare access may require time before their effects become visible in broader human development indicators.
2. Education spending showed a significant negative relationship with HDI.
Education expenditure had a coefficient of -1.185 and a p-value of 0.002, indicating a statistically significant relationship.
At first glance, the finding may appear surprising because education is generally considered an important investment in human capital. However, Mahrani and Darwin emphasize that the result should not be interpreted as evidence that education spending itself harms human development.
The researchers point to several possible explanations, including the time required for education investments to generate measurable results, differences in budget composition, and variations in implementation capacity between provinces. Spending on infrastructure, teacher-related programs, administration, and institutional development may take several years to affect educational outcomes and ultimately influence HDI.
3. Economic growth was not statistically associated with HDI.
Economic growth recorded a coefficient of 0.001 with a p-value of 0.976. The result indicates that changes in economic growth during the observation period were not directly associated with changes in HDI in the model.
This finding reinforces the idea that economic expansion does not necessarily produce improvements in human development unless its benefits reach households through employment, income, and access to essential services.
4. Poverty had a strong negative relationship with HDI.
Poverty recorded a coefficient of -1.058, with a p-value below 0.001. Among the variables examined, poverty emerged as one of the clearest socioeconomic constraints on human development.
The researchers explain that limited household income can restrict access to education, healthcare, adequate nutrition, and living conditions that support productivity. These disadvantages can accumulate over time and across generations, affecting multiple dimensions of human development.
What the Findings Mean for Policy
The findings suggest that improving HDI in Eastern Indonesia requires a shift from focusing solely on the size of government budgets toward the quality, targeting, accessibility, and effectiveness of public spending.
For health policy, the researchers recommend strengthening basic healthcare services, improving the distribution of health workers, expanding facilities in remote areas, and emphasizing preventive and promotive programs.
For education, the negative statistical relationship should not be used as a reason to reduce funding. Instead, it points to the need for closer attention to learning quality, teacher distribution, infrastructure, access, and the way education budgets are implemented and evaluated over the medium and long term.
The study also places poverty reduction at the center of human development policy. Social protection, employment opportunities, education, healthcare, nutrition, and infrastructure need to work together so that economic and fiscal resources produce tangible improvements in people's lives.
Mahrani and Darwin of Universitas Negeri Makassar emphasize that human development in Eastern Indonesia depends not only on government expenditure and economic growth, but also on how effectively fiscal resources are transformed into accessible and equitable public services.
Study Limitations
The researchers note that the analysis covers only 10 provinces and 100 province-year observations. The model also does not include several potentially important factors, such as income inequality, unemployment, governance, fiscal capacity, demographic characteristics, and public-service quality.
Another limitation is that health and education spending were measured according to spending levels rather than the quality or composition of expenditure. The analysis also primarily captures relationships within the same period, meaning it may not fully capture the long-term effects of investments in health and education.
Future research could therefore examine longer-term effects, different types of government expenditure, and differences between Eastern and Western Indonesia.
Author Profile
Mahrani is affiliated with Universitas Negeri Makassar, Indonesia, and serves as the corresponding author of the article. Her research in this publication focuses on human development, government expenditure, education, health, economic growth, and poverty.
Dirmansyah Darwin is also affiliated with Universitas Negeri Makassar, Indonesia. The article examines the relationship between fiscal policy, socioeconomic conditions, and human development in Eastern Indonesia.
Research Source
Article Title: 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
Journal: International Journal of Applied Research and Sustainable Sciences (IJARSS)
Publication Year: 2026
Volume: 4, No. 8, pp. 727–746
Authors: Mahrani and Dirmansyah Darwin
Affiliation: Universitas Negeri Makassar, Indonesia
DOI: 10.59890/ijarss.v4i8.38
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