The analysis of determinant factors of poverty and its effect toward economic development of Islamic society: case study at Serdang Bedagai Regency at North Sumatera Province

Abstract

In the last two decades, Indonesia has experienced contrasting episodes in terms of economic growth and changes in the poverty rate. Prior middle 1980s until middle 1990s, Indonesia experienced a high economic growth and a rapid reduction in poverty. During the economic crisis period of 1997- 1999, however, the economy contract substantially and poverty increased significantly, wiping out many years of progress. Post-crisis, economic growth slowly recovered, but the poverty rate declined much faster falling to below the pre-crisis level. These contrasting episodes of growth and poverty trends provide the opportunity to empirically assess the relationship between economic development and poverty. Study of this relationships, usually divide the economy into three sectors: agriculture, industry and services. The mechanism of the relationships between economic development and change in poverty must be better understood in order to formulate the most effective strategy for poverty reduction through macroeconomic policy. Therefore, this research tries to examine more specific than previous studies, that is the effect of determinant factors (such as: level of formal education, level of social economic, agriculture land ownership, Islamic job tradition) of poverty toward economic development. This research is done at Serdang Bedagai Regency at North Sumatera Province. The research hypothesis states t hat level of formal education and agriculture land ownership-effect economic development- significantly. Otherwise, level of social economic and Islamic job tradition insignificantly effect economic development.