The Village Fund, Village Tourism Development, and Its Impact on Income Inequality in Rural Indonesia: How do Village Elites Shape It?

Abstract

In Indonesia, the central government is implementing the Village Fund Program to alleviate rural poverty through, among others, developing village tourism under the village-owned enterprise scheme (Badan Usaha Milik Desa/BUMDes). However, income inequality has been increasing severy year. Existing studies have highlighted the problems of the village government's management of village funds and its impact on poverty alleviation. The understanding of income inequality remains restricted. This research investigates the impact of the implementation of the Village Fund on village tourism development and its impact on income inequality. Using mixed methods, this research was conducted in one of the pilot villages nationally acknowledged as the best in implementing the program and found that village elites earned six times more income than non-elites. From the political economy approach, this article demonstrates how village elites implemented the Village Fund in developing a BUMDes-based tourism village and how they contribute to income inequality.

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