Solutions to Improve Welfare in Indonesia: Agency Theory Perspective
Abstract
This study focuses on testing the effect of good governance on welfare moderated by corruption in all provincial governments in Indonesia during the period 2014-2018. The test was conducted using panel data regression, where welfare was measured using the human development index value, good governance was measured using the governance index based on the principles of good governance from KNKG which was processed using the Principal Component Analysis method, corruption was measured using the number of irregularities found by government audit institutions, and the size of the regional government was measured using the number of state civil servants. The research data came from BPK-RI and BPS-RI. The test results found that good governance had a positive and significant effect on welfare, and corruption weakened the relationship between good governance and welfare, so the implementation of good governance and the continuous eradication of corruption in regional government organizations is very important.
References
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Kurniati, S. (2019). Stock Returns and Financial Performance as Mediation Variables in the Influence of Good Corporate Governance on Corporate Value. Corporate Governance, 19(6), 1289–1309. https://doi.org/10.1108/CG-10-2018-0308
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Liu, Jiandang, Tang, J., Zhou, B., & Liang, Z. (2018). The effect of governance quality on economic growth: Based on China’s provincial panel data. Economies, 6(4), 1–23. https://doi.org/10.3390/economies6040056
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Makuta, I., & O’Hare, B. (2015). Quality of governance, public spending on health and health status in Sub Saharan Africa: a panel data regression analysis. BMC Public Health, 15(1), 932. https://doi.org/10.1186/s12889-015-2287-z
Mira, R., & Hammadache, A. (2017). Good Governance and Economic Growth: A Contribution to the Institutional Debate about State Failure in Middle East and North Africa. Asian Journal of Middle Eastern and Islamic Studies, 11(3), 107–120. https://doi.org/10.1080/25765949.2017.12023313
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Muthalib, A. A., Adam, P., Rostin, R., Saenong, Z., & Suriadi, L. O. (2018). The influence of fuel prices and unemployment rate towards the poverty level in Indonesia. International Journal of Energy Economics and Policy, 8(3), 37–42.
Ngubane, M. Z., Mndebele, S., & Kaseeram, I. (2023). Economic growth, unemployment and poverty: Linear and non-linear evidence from South Africa. Heliyon, 9(10).
Nguyen, C. V., Giang, L. T., Tran, A. N., & Do, H. T. (2021). Do Good Governance and Public Administration Improve Economic Growth and Poverty Reduction? The Case of Vietnam. International Public Management Journal, 24(1), 131–161. https://doi.org/10.1080/10967494.2019.1592793
Ortega, B., Casquero, A., & Sanjuán, J. (2016). Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012. Social Indicators Research, 127(2), 691–719. https://doi.org/10.1007/s11205-015-0968-8
Paeleman, I., & Vanacker, T. (2015). Less is More, or Not? On the Interplay between Bundles of Slack Resources, Firm Performance and Firm Survival. Journal of Management Studies, 52(6), 819–848. https://doi.org/10.1111/joms.12135
Parvin, S. S., Hossain, B., Mohiuddin, M., & Cao, Q. (2020). Capital Structure, Financial Performance, and Sustainability of Micro-Finance Institutions (MFIs) in Bangladesh. Sustainability, 12(15), 6222. https://doi.org/10.3390/su12156222
Rahayuningtyas, D. P. A., & Setyaningrum, D. (2017). Pengaruh Tata Kelola dan E-Government Terhadap Korupsi. EKUITAS (Jurnal Ekonomi Dan Keuangan), 1(4), 431–450. https://doi.org/10.24034/j25485024.y2017.v1.i4.2597
Rindermann, H., Kodila-Tedika, O., & Christainsen, G. (2015). Cognitive capital, good governance, and the wealth of nations. Intelligence, 51, 98–108. https://doi.org/10.1016/j.intell.2015.06.002
Saha, S., & Zhang, Z. (2017). Democracy-growth nexus and its interaction effect on human development: A cross-national analysis. Economic Modelling, 63, 304–310. https://doi.org/10.1016/j.econmod.2017.02.021
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Published
2026-04-02
How to Cite
KHAIRUDIN, Khairudin; AMINAH, Aminah; RISWAN, Riswan.
Solutions to Improve Welfare in Indonesia: Agency Theory Perspective.
Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, [S.l.], v. 21, n. 1, p. 16-27, apr. 2026.
ISSN 2620-8849.
Available at: <https://jos.unsoed.ac.id/index.php/er/article/view/13722>. Date accessed: 10 apr. 2026.
doi: https://doi.org/10.32424/er.v21i1.13722.
Section
Articles
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