The Illusion of Prosperity in the Shadow of Growth: Institutional Quality, Social Protection, and the Paradox of Development in Indonesia

Authors

Malik Abd. Karim Amirullah Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia Author https://orcid.org/0009-0002-4101-9106
Muhammad Akbar Ramadhani Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia Author
Anava Salsa Nur Savitri Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia Author

DOI:

https://doi.org/10.66277/nmr.1.1.200

Keywords:

ARDL Model, Economic Growth, Institutional Quality, Prosperity Index, Social Protection

Abstract

Indonesia ranks sixth in the Association of Southeast Asian Nations (ASEAN) on the 2024 Prosperity Index, despite maintaining an average annual economic growth rate exceeding 5%. This stark contrast challenges the assumption that growth in Gross Domestic Product (GDP) per capita automatically translates into broad-based prosperity. This study examines the effects of macroeconomic conditions, social protection, and institutional quality on Indonesia’s prosperity from 1995 to 2024 using the Autoregressive Distributed Lag (ARDL) approach. The variables analyzed include GDP per capita, government expenditure, foreign direct investment, urbanization, the equal protection index, and control of corruption. The findings reveal that equal legal protection has a significant positive long-term effect, whereas economic growth and foreign capital inflows do not consistently enhance prosperity and may even have negative impacts if benefits are concentrated. Government expenditure exhibits a negative long-term effect, reflecting inefficiencies and issues related to spending composition. These results underscore that without institutional reform and stronger social protection, economic growth risks producing illusory prosperity. This study contributes to the Institutional Quality–Growth Nexus literature and highlights the urgent need for policies that balance growth, equity, and governance to achieve sustainable prosperity.

[Indonesia menempati peringkat keenam di ASEAN dalam Prosperity Index tahun 2024, meskipun mempertahankan tingkat pertumbuhan ekonomi tahunan rata-rata di atas 5%. Kontras yang mencolok ini menantang asumsi bahwa peningkatan Produk Domestik Bruto (PDB) per kapita secara otomatis menghasilkan kesejahteraan yang merata. Penelitian ini mengkaji pengaruh kondisi makroekonomi, perlindungan sosial, dan kualitas institusi terhadap tingkat kesejahteraan di Indonesia selama periode 1995-2024 dengan menggunakan pendekatan Autoregressive Distributed Lag (ARDL). Variabel yang dianalisis meliputi PDB per kapita, pengeluaran pemerintah, investasi asing langsung, urbanisasi, indeks perlindungan hukum yang setara, serta pengendalian korupsi. Hasil penelitian menunjukkan bahwa perlindungan hukum yang setara memiliki pengaruh positif jangka panjang yang signifikan, sementara pertumbuhan ekonomi dan arus modal asing tidak secara konsisten meningkatkan kesejahteraan, bahkan dapat berdampak negatif apabila manfaatnya terpusat pada kelompok tertentu. Pengeluaran pemerintah menunjukkan pengaruh negatif dalam jangka panjang, yang mencerminkan inefisiensi serta permasalahan dalam komposisi belanja. Temuan ini menegaskan bahwa tanpa reformasi kelembagaan dan penguatan perlindungan sosial, pertumbuhan ekonomi berisiko menghasilkan kesejahteraan yang semu. Studi ini berkontribusi pada literatur Institutional Quality–Growth Nexus serta menyoroti urgensi kebijakan yang menyeimbangkan pertumbuhan, pemerataan, dan tata kelola untuk mencapai kesejahteraan yang berkelanjutan.]

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