Spillover Effect of Human Capital and Human Development in Shaping Agricultural Productivity—Scope of Indonesian Capital City (IKN)

Abstract

Penajam Paser Utara (PPU) is recognized as a region rich in natural resources, with agriculture serving as its primary sector. Concurrently, the Indonesian government has relocated the administrative center from Jakarta to PPU. Given that PPU is situated in the center of Indonesia, the primary rationale for moving the Indonesian Capital City (IKN) is to equalize infrastructure and integrate the economy across all regional levels. In addition to undertaking complex developmental improvements, PPU faces new challenges in maintaining its existing agricultural prospects while transitioning into a comprehensive IKN development zone. Despite overlapping economic policies, PPU must implement concrete strategies to establish itself as a significant agricultural commodity-producing region for East Kalimantan, particularly for IKN. This study aims to explore the relationship between investment, labor, Information and Communication Technology (ICT), and the Farmer's Exchange Rate (NTP) on agricultural productivity, irrespective of the involvement of human capital and human development. The dataset covers the period from 2015 to 2023 and is processed using Moderated Regression Analysis (MRA). The objectivity of the study is on PPU as an IKN. Empirical evidence indicates that ICT has a significant impact on human development (p < 1%). Both labor and ICT significantly influence agricultural productivity (p < 5%). Furthermore, while human capital was unable to serve as a moderating variable, human development significantly moderated the relationship between labor and agricultural productivity (p < 5%). The novelty of this study lies in identifying a gap not addressed by previous research, thereby contributing to the advancement of fresher thinking in the formulation of agricultural productivity models. The study's findings offer practical recommendations for the government to enhance agricultural productivity through the support of intensive investment programs. By implementing effective investment policies, it is anticipated that technological advancements will be revitalized. The adoption of technology is essential for developing human capital and fostering human development, which, in turn, shapes labor skills and promotes prosperity in the agricultural sector.