The village-level place-based policy in Eastern Indonesia : evidence from the Integrated Village Economic Transformation Program

Abstract

This study evaluates the impact of the Integrated Village Economic Transformation (TEKAD) program as a village-level Place-Based Policy (PBP) intervention model that utilizes a Community-Driven Development (CDD) approach. The program has been operational since 2021, targeting 1,110 villages spread across the provinces of Maluku, North Maluku, East Nusa Tenggara, and Papua regions. Nevertheless, the impact of the TEKAD program design has never been quantitatively evaluated yet. This study is a quasi-experimental evaluation of the TEKAD program that utilizes staggered analysis and the Village Potential Survey (PODES) panel data by BPS-Statistics Indonesia covering the period from 2014 to 2025, combined with satellite data from the Visible Infrared Imaging Radiometer Suite (VIIRS) Night-Time Light. Using Two-Way Fixed Effects (TWFE) with clustered standard errors at the district level and a staggered Difference-in-Differences (DiD) approach using the Callaway and Sant'Anna estimator, the results show that the TEKAD program exerts a partial impact on economic transformation in Phase I villages and financial access in Phase II villages. Meanwhile, the program's impact on multidimensional poverty is only demonstrated by a decrease in the issuance of Poverty Certificates (SKTM) in Phase II villages. Furthermore, in the institutional dimension, the program has stronger effects in increasing the number of Village-Owned Enterprises (BUM Desa) business units and the adoption of the Village Financial System (VFS) in villages with a lower baseline. This study has several limitations: first, PODES data is only available at the village level as a proxy and does not capture impacts on household income and institutional quality. Second, the post-treatment observation period remains limited and is unable to capture anticipation and long-term effects. Third, the availability of variables across PODES periods restricts the number of indicators that can be tested. Fourth, Night-Time Light imagery proves insensitive to capturing daytime economic activities in rural areas dominated by the agricultural sector. Future research is recommended to use a more differentiated approach between Phase I and Phase II villages, integration with financial service expansion programs, qualitative validation of the reduction in SKTM, and program designs that incorporate resilience components against external shocks. The use of household-level data, a longer time horizon, a mixed-methods approach, and alternative satellite data such as NDVI and the Built-Up Index are recommended to complement and validate the baseline findings of this study.