Unpacking the Myth: Are Cooperatives the Engine of Local Growth?
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This study conducts a deeper analysis of the economic impact of cooperatives. It aims to explore the relationship between cooperative presence and key local economic indicators, including GRDP growth, open unemployment rate, and average household consumption at the regional level.
To explore the impact of cooperatives thoroughly, we utilize three proxies: (1) the total number of cooperatives in each regency or municipality, (2) the density of cooperatives relative to the regional household, and (3) the number of households who have received credit from cooperatives
Using two methods, Ordinary Least Squares (OLS) regression and Propensity Score Matching (PSM) the results suggest that the presence of cooperatives is not consistently associated with significant improvements in regional GRDP growth or household consumption. While the associations are generally positive, they are not statistically robust in this dataset.
However, the regional existence has a modest negative association with the unemployment rate. The association is strongly significant when using the number of households that received credit from cooperatives as a proxy, implying that cooperative-based financing may support micro-entrepreneurship, self-employment, or small business continuity (especially in the informal sector) thus increasing employment opportunities.
When disaggregated by cooperative type, Savings and Loans Cooperatives (Kospin) show a significant correlation with reduced unemployment, highlighting their potential as financial enablers. In contrast, Village Unit Cooperatives (KUD) do not exhibit the same pattern, likely due to their broader and less targeted operational scope and the structural disadvantages faced by rural areas in which they operate such as limited market access and economic diversification.
Finally, it is important to note that this study primarily reflects short-term relationships. Future research using panel data is recommended to better assess long-term causal dynamics and further clarify the economic role of cooperatives in regional development.
