Panel Data Regression Analysis on Oil Palm Plantation Development and Community Welfare

Abstract

This research employs a green economy theory approach, which is rare in oil palm plantation studies. This study aims to analyze the impact of oil palm plantations on community welfare, using variables such as the proportion of oil palm plantations, productivity, and farmer-added value, alongside area control and Gross Fixed Capital Formation, with the dependent variable being the welfare level of the Human Development Index. Data from the Central Statistics Agency at the district and provincial levels consisting of 8 districts with a time span of 10 years. Utilizing panel data regression models. Results show plantation areas are less prosperous than non-plantation areas in North Sumatra's east coast. The results highlight the need for Local governments need to promote economic diversification, particularly through downstream agro-industries and MSME development, while prioritizing productivity improvements rather than land expansion.