Revitalizing Schools, Revitalizing Economies

Mohammad Nur Rianto Al Arif
Professor at UIN Syarif Hidayatullah Jakarta
Secretary General of the Central Board of the Indonesian Lecturers Association

A recent study by LP3ES shows that the school revitalization program has had a measurable impact on local economies, reflected in increased provincial gross regional domestic product (GRDP). This finding is significant amid growing demands that every rupiah of the State Budget (APBN) and Regional Budget (APBD) generate multiple benefits, not only socially but also economically.

Amid the long-standing debate over the effectiveness of public spending, particularly in the education sector, one important point is often overlooked: schools are not merely places of learning; they can also serve as nodes of local economic activity. When the government allocates funds to build, rehabilitate, or revitalize schools, the impact goes beyond freshly painted walls or repaired roofs.

The impact spreads to building material shops, construction workers, local craftsmen, and small businesses around the school. This is what economists refer to as the multiplier effect.

This article seeks to examine more broadly the meaning of these findings. Is school revitalization merely a physical project? Or is it, in fact, a strategic economic policy instrument, especially for the regions? How does the multiplier mechanism work, and what are the implications for future policy design?

So far, school revitalization has often been narrowly understood as repairing damaged buildings, adding classrooms, or upgrading facilities. This perspective is not incorrect, especially given that many schools, particularly in remote areas, are still in poor condition. However, an overly technocratic approach can cause us to forget that every physical education project is also an economic project.

School revitalization involves a long chain of economic activities: planning, procurement of construction materials, hiring labor, logistics distribution, and daily consumption by workers. In this context, public spending in education transforms into a local economic stimulus.

The LP3ES study captures this phenomenon clearly. The school revitalization program not only improves the quality of education services but also stimulates regional economies, particularly sectors that form the backbone of people’s livelihoods, such as small building supply stores, small-scale construction services, and supporting MSMEs.

In economic theory, the multiplier effect refers to a situation in which one unit of initial spending generates a larger increase in national or regional income than the original expenditure. In other words, the money spent does not stop at one point; it circulates and creates further economic activity.

In the school revitalization program, the multiplier mechanism can be explained simply. When the government allocates funds for school renovations, the money is first received by contractors or project implementers. It is then spent on purchasing materials from local stores, paying workers’ wages, renting equipment, and procuring supporting services.

Workers who receive wages subsequently spend their income on daily needs such as food, transportation, and household expenses. Small businesses around the school also feel the impact. As money circulates more widely, local economic growth is stimulated and ultimately reflected in higher GRDP.

The LP3ES findings are important because they provide empirical evidence for this theory. The school revitalization program is positively correlated with increases in provincial GRDP, especially in regions that involve local businesses and labor in implementation.

This GRDP growth does not solely come from the formal construction sector but also from informal sectors and MSMEs that are often marginalized in macroeconomic calculations. Small hardware stores, door and window craftsmen, welders, and food vendors near project sites become key actors in this ecosystem.

In other words, school revitalization functions as a bridge between education policy and regional economic policy. It connects the agenda of improving human resources with strengthening the people’s economy.

In many regions, schools are not only centers of education but also hubs of social and economic activity. Their presence supports surrounding businesses, transportation services, stationery providers, and small enterprises that depend on school-related activities.

When schools are revitalized, these economic nodes are strengthened. Construction or renovation processes create a surge in demand for local goods and services. After completion, improved school facilities may also increase long-term activity, for example, through higher student enrollment, more teachers, and expanded school programs.

These long-term effects are often not seriously calculated. Yet decent and comfortable schools not only improve learning quality but also enhance the attractiveness of the area as a place to live and conduct economic activities.

One important LP3ES finding is the tangible impact of school revitalization on MSMEs. MSMEs are often described vaguely as “positively affected sectors.” However, in this context, the impact is concrete.

Local hardware stores experience increased sales of cement, sand, paint, and other materials. Small furniture producers receive orders for desks and chairs. Food stalls around project sites gain new customers from workers.

Even local transportation services benefit from higher demand. For MSMEs, school revitalization projects often provide relatively stable income, especially in areas with limited economic activity. In uncertain economic conditions, such programs function as anchors of local economies.

A frequent criticism of development policy is its concentration in major cities. Large infrastructure projects are built, yet benefits are unevenly distributed. In this regard, school revitalization has a strategic advantage because it is dispersed to remote areas. Nearly every village has a school. This means the program has the potential to reach regions that are often excluded from investment flows. The multiplier effect thus becomes more inclusive.

The LP3ES findings strengthen the argument that education spending based on school infrastructure can serve as a tool for economic equity. The program not only improves education quality in disadvantaged areas but also drives local economic activity.

However, the multiplier effect does not occur automatically. Several conditions must be met. First, local involvement. If projects are fully executed by large contractors from outside the region, much of the funding will leak out, reducing local multiplier effects.

Second, transparency and governance. School revitalization must be managed accountably to prevent corruption or substandard work. Poor construction quality harms not only education but also long-term economic potential.

Third, continuity. The multiplier effect will be stronger if school revitalization is planned and sustained, rather than sporadic and reactive, especially in terms of maintenance.

At the national policy level, the LP3ES findings should serve as an important reflection. Education spending is often framed as separate from economic spending, as if they exist at opposite poles. Yet school revitalization demonstrates that education policy can simultaneously function as economic policy.

Amid fiscal pressures and demands for budget efficiency, the government must prioritize programs with layered benefits. School revitalization meets these criteria: it improves education quality, creates jobs, supports MSMEs, and increases regional GRDP.

Going forward, the success indicators of school revitalization should not be measured solely by the number of renovated buildings. More comprehensive evaluation is needed, including local economic impacts and contributions to GRDP.

The LP3ES study has opened the way. The challenge is ensuring that government and stakeholders use these findings as a basis for policy improvement. With accurate data and analysis, school revitalization can be designed as an integrated development program, not merely a physical project.

School revitalization teaches us an important lesson: investment in education never stands alone. It is always intertwined with surrounding social and economic dynamics. The LP3ES findings on its impact on provincial GRDP through local economic growth reaffirm that schools are strategic development assets.

When classrooms are repaired, local economies move. When school quality improves, hope for the future grows. In this sense, measuring the multiplier effect of school revitalization is not merely about numbers and statistics; it is about how public policy can work holistically to strengthen education while energizing the people’s economy.

If managed well, school revitalization will not only produce educated generations but also build a more equitable and sustainable economic foundation.

This article was published in the Detik column on Friday, January 16, 2026.