THE IMPACT OF TECHNOLOGICAL CHANGE ONPOVERTYALLEVIATION IN INDONESIA

Abstract

his paper examined the impact of technological change on poverty alleviation, with unemployment rate andeconomic growth as moderating variables, in Indonesia during the period of 10 years (2004-2013). This periodwas coincided with the two period of Yudhoyono Administration. Technological change was measured by totalfactor productivity (TFP) growth, unemployment was measured by open unemployment rate, economic growthwas measured by the growth of Gross Domestic Product based on the year of 2000 constant price, and povertyalleviation was measured by the percentage of poor people. Impact analysis was conducted using SEM-PathAnalysis techniques. Most data were directly gathered from the National StatisticsAgency, except data on TFPgrowth. The results showed that first, technological change,directly, had a not significant positive impact onpoverty alleviation (Path-1). Second, technological change, indirectly, had a positive significant impact onpoverty alleviation (Path-2). Third,technological change, indirectly, had a positive significant impact on povertyalleviation (Path-3). Fourth, technological change, indirectly, had positive significant impact on povertyalleviation (Path-4).

Keywords: technological change, unemployment, economic growth, poverty alleviation, direct and indirectimpacts.