Regional Competitiveness as a Moderator Between Economic Growth and Poverty in Central Java

Abstract

This study offers a theoretical exploration of regional competitiveness as a moderating variable in the relationship between economic indicators and poverty in Central Java, Indonesia. While macroeconomic indicators like GDP growth, investment, and labor market performance are traditionally used to explain poverty trends, this paper argues that such variables alone fail to capture the underlying spatial disparities that shape developmental outcomes. Drawing on theories of endogenous growth, spatial development, and institutional economics, the study conceptualizes competitiveness as a multidimensional construct comprising infrastructure, innovation, governance, and human capital. Using qualitative document analysis and thematic synthesis, the research finds that economic gains yield significantly better poverty reduction outcomes in districts with higher levels of regional competitiveness. Conversely, low-competitive regions exhibit muted responses to positive economic indicators due to infrastructural limitations and institutional weaknesses. These findings underscore the necessity of integrating competitiveness into poverty analysis models. The study’s contribution lies in its reconceptualization of regional competitiveness as a dynamic moderator rather than a background condition, providing both theoretical refinement and practical insights. Policy implications emphasize place-based strategies focused on capacity-building to ensure that economic growth is both inclusive and sustainable across varied regional contexts in Indonesia.