The Mediating Role of Labour Force Partisipation Rate in the Effects of Domestic and Foreign Direct Investment on Poverty in East Kalimantan Province
Abstract
This study aims to determine the influence of Domestic Direct Investment (DDI) and Foreign Direct Investment (FDI) on Poverty through the labor force participation rate (LFPR) in districts/cities of East Kalimantan Province. This study uses a quantitative approach. The data used are secondary data obtained through publications and surveys. The type of data is panel data for 10 districts/cities in East Kalimantan Province for the 2015–2025 period with 110 observations. The analysis tool uses path analysis with the help of STATA 17.0 software. The results of the study showed that DDI had a significant effect on LFPR, and FDI had an insignificant effect on LFPR. DDI also and significant effect on poverty, while FDI had an insignificant effect. Furthermore, LFPR has a significant effect on poverty, which shows that the increase in the participation of the working-age population in the labor market is related to poverty reduction. However, the results of mediation testing showed that LFPR did not significantly mediate the influence of DDI or FDI on poverty. Research implications emphasize investment aimed at productive job creation, human resource quality, local worker involvement, and stronger regional economic linkages, particularly amid the economic transformation and urban development in East Kalimantan.
