The Nexus OF Economic Growth, Poverty, Unemployment, AND Islamic Human Development: Empirical Evidence ON THE Moderating Effect OF Islamic Good Governance

Abstract

Human development is increasingly recognized as the central goal of economic and social progress; yet, conventional Human Development Index (HDI) measures remain limited, as they neglect spiritual, moral, and governance dimensions. To address this gap, this study employs the Islamic Human Development Index (I-HDI), grounded in the principles of maqāṣid al-sharīʿah. It examines the role of Islamic Good Governance (IGG) in shaping development outcomes.

The study examines the impact of economic growth, poverty, and unemployment on Islamic Human Development, with Islamic Good Governance considered both a direct determinant and a moderating factor. Primary data were collected from 492 respondents across nine districts in Palopo City, Indonesia, and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The results indicate that economic growth has a positive and significant impact on Islamic Human Development, while poverty and unemployment exert significant negative effects. IGG contributes directly to higher levels of I-HDI and moderates the relationships by amplifying the benefits of growth and reducing the adverse impacts of poverty and unemployment.

This study contributes to the literature by empirically integrating I-HDI and IGG within a single framework, offering a more holistic perspective than conventional indices. The findings provide theoretical refinement and practical guidance for policymakers seeking to design inclusive, equitable, and spiritually grounded development strategies.