Seaport status, port access, and regional economic development in Indonesia

As the biggest archipelagic nation, Indonesia considers port infrastructure one of its most important infrastructures in bolstering regional economic development. In this paper, we study the impacts of access to existing port infrastructure on regional development, i.e., income per capita, productivity, and poverty at district level in Indonesia. While other similar studies use the size of seaport, we argue that access may be much more important. Additionally, using the access variable accommodates spillover effects of the seaport on landlocked districts. We define access to the port as the shortest distance of the respective district to the nearest port. Our estimation results show that proximity to the main ports has positive effects on GDP per capita, labor productivity, poverty rate, and poverty gap. For the regions with distances to the nearest main port over 150 Km, the manufacturing sector only contributes 5.9–7.1% to GDRP. A region located at 29–67 Km from the nearest main port has a relatively low poverty rate (10.3–12.2% on average). This rate is 10% less than in other regions located more than 200 Km from the nearest main port. We also find that the importance of ports may vary between Java and non-Java regions.