<![CDATA[To reducting poverty consistently in the long term is goal of regional development. Local governments have an obligation to overcome poverty through effective and targeted spending policies. This study aims to analyze the impact of increase in local government spending and to find out what types of spending are effective in reducing poverty in Jambi Province. The analytical method is multiple linear regression analysis, with the rate of economic growth, the ratio of capital expenditure to total regional expenditure, the ratio of regional expenditure to health, and the ratio of education expenditure to total regional expenditure as independent variables. The results proved that local government capital expenditures and health spending have a direct impact on poverty reduction in Jambi Province. The increase in capital expenditure will encourage the needed to increase production capacity, increase demand for raw materials, expand employment opportunities, and create value added and income for the poor. On the other hand, education spending do not have a significant impact on reducing poverty. But in long term, it would improve the quality of human resources and labor productivity on reducing poverty in Jambi Province. The policy implication is the priorities of local government spending by giving a larger portion that are directly benefitted to the poor, especially capital expenditures in agriculture, plantation and fishery sectors. In addition, local governments must facilitate the development of small and medium enterprises, including facilitating more access to working capital, technology, information and market, also improving on health access and infrastructure.]]>
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