Economic Growth and Environmental Quality in Java and Sumatra: A Panel Data Analysis of GRDP, Population Density, and Poverty

Anita Setyawati; Sugeng Hariadi

doi:10.63922/ijebir.v5i04.5033

Anita Setyawati Master of Economics Program, Faculty of Business and Economics, Surabaya University, Indonesia
Sugeng Hariadi Master of Economics Program, Faculty of Business and Economics, Surabaya University, Indonesia

DOI: https://doi.org/10.63922/ijebir.v5i04.5033

Keywords: Population Density, Environmental Quality Index, Poverty Severity Index, Gross Regional Domestic Product, Panel Data

Abstract

Environmental quality is a key indicator of sustainable development, yet the impacts of economic growth, population density, and poverty remain inconclusive. This study examines the effects of Gross Regional Domestic Product (GRDP), population density, and the poverty severity index on the Environmental Quality Index (EQI) across 16 provinces in Java and Sumatra during 2015–2024. Using a quantitative approach with balanced panel data (160 observations), the analysis applies panel regression, with the Fixed Effect Model (FEM) selected through the Chow and Hausman tests. Cluster-robust standard errors were employed to address heteroskedasticity. The findings reveal that GRDP has a positive and significant effect on EQI, while population density and poverty severity have no significant effects. Collectively, the three variables significantly influence environmental quality. The results are conceptually consistent with the Environmental Kuznets Curve (EKC), although the hypothesis cannot be empirically confirmed because the model excludes the squared GRDP (GRDP²) term.

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