THE EFFECT OF HDI, STUNTING, AND SANITATION ACCESS ON ECONOMIC GROWTH IN HORSESHOE REGION OF EAST JAVA: A SYS-GMM DYNAMIC PANEL METHOD APPROACH

Abstract

This  study  aims  to  analyze  the  effect  of  Human  Development  Index  (HDI),  stunting prevalence, and sanitation access on economic growth in the Tapal Kuda region, East Java, which includes Bondowoso, Banyuwangi, Jember, Lumajang, Probolinggo, and Situbondo districts. The study used panel data from 2019 to 2023 with the System Generalized Method of Moments (SYS- GMM) approach to overcome potential simultaneity and endogeneity bias. The  results  show  that  HDI  has  a  significant  positive  effect  on  economic  growth,  while stunting  has  a  significant  negative  impact.  In  addition,  access  to  proper  sanitation contributes  positively  to  improving  public  health,  reducing  infectious  diseases,  and supporting labor productivity. SYS-GMM proved to be a more efficient method than other methods, such as FD-GMM, FE, and PLS, in estimating dynamic panel data models. This study recommends the importance of improving education and health services to increase HDI, nutrition interventions to reduce the prevalence of stunting, and expanding access to proper sanitation to promote sustainable economic development in the Horseshoe region.