THE EFFECT OF ZAKAT, INFAQ, SADAQAH (ZIS) POVERTY AND HUMAN CAPITAL INDEX (HCI) ON ISLAMIC HUMAN DEVELOPMENT INDEX (I-HDI) IN INDONESIA IN 2010-2023 IN THE PERSPECTIVE OF ISLAMIC ECONOMICS(ECM APPROACH : ERROR CORRECTION MODEL)

Abstract

This study investigates the impact of Zakat, Infaq, and Sadaqah (ZIS), poverty, and Human Capital Index (HCI) on the Islamic Human Development Index (I-HDI) in Indonesia for the period 2010-2023 using the Error Correction Model (ECM) approach. This study aims to analyze the short-term and long-term effects of ZIS distribution, poverty rate, and HCI on I-HDI. Using quantitative data sourced from secondary socio-economic statistics, including reports from the Central Bureau of Statistics (BPS), the National Amil Zakat Agency (BAZNAS), and the World Bank, this study employs a time series methodology to assess the relationship between these variables. The main findings reveal that ZIS distribution has a significant effect on I-HDI, indicating that increased charitable contributions correlate with improved human development outcomes. In contrast, poverty showed a detrimental effect on I-HDI, highlighting the challenges faced by poor populations in achieving sustainable development. In addition, HCI is shown to contribute to I-HDI, emphasizing the importance of human capital investment in promoting overall development. The ECM analysis explains the short-run dynamics and long-run equilibrium relationship among these variables, providing valuable insights for policymakers in Indonesia. This research contributes to the discourse of Islamic economics, offering a framework for understanding the interaction between charitable practices and human development in a predominantly Muslim context.