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Regional Disparity and Vertical Conflict in Indonesia

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  • Mohammad Zulfan Tadjoeddin
  • Widjajanti I. Suharyo
  • Satish Mishra

Abstract

This study examines data on regional inequality in Indonesia to help explain regional unrest. Analysis indicates that the New Order regime's equalization policies produced low levels of welfare inequality by transferring wealth from resource-rich provinces to poor communities on the one hand and to Jakarta on the other. Many in the subsidizing provinces resent this strategy which has held back their regions' development. They therefore exhibit an aspiration to inequality as they seek to stop such wealth transfer and to acquire greater control over their own resources. Yet policy emphasis on the economy over development of political institutions has left the political system with no effective means to address regional grievances, which are now manifest in vertical conflicts between the centre and the regions. We therefore propose a new philosophy for equalization policies. Rather than using a development fund to distribute wealth evenly across the regions, policy should aim to equalize people's opportunities and guarantee a minimum standard of basic services for all Indonesians, without impeding the growth potential of regions.

Suggested Citation

  • Mohammad Zulfan Tadjoeddin & Widjajanti I. Suharyo & Satish Mishra, 2001. "Regional Disparity and Vertical Conflict in Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 6(3), pages 283-304.
    • Handle: RePEc:taf:rjapxx:v:6:y:2001:i:3:p:283-304
    DOI: 10.1080/13547860120097368
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    References listed on IDEAS

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    Cited by:

    1. Aloysius Gunadi, Brata, 2008. "Creating New Regions, Improving Regional Welfare Equality?," MPRA Paper 12540, University Library of Munich, Germany.
    2. Takahiro Akita & Awaludin Aji Riadi & Ali Rizal, 2019. "Fiscal Disparities in Indonesia under Decentralization: To What Extent Has General Allocation Grant(DAU) Equalized Fiscal Revenues?," Working Papers EMS_2019_05, Research Institute, International University of Japan.
    3. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Publications - Reports 14632, The World Bank Group.
    4. Andar Ristabet Hesda & Rus’an Nasrudin, 2023. "Social Capital and Conflict in the Post-Suharto Regime in Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 69, pages 15-34, Juni.
    5. Sudarno Sumarto & Marc Vothknecht & Laura Wijaya, "undated". "Explaining the Regional Heterogeneity of Poverty: Evidence from Decentralized Indonesia," Working Papers 276, Publications Department.
    6. Mohammad Zulfan Tadjoeddin, 2013. "Educated but poor: Explaining localized ethnic violence during Indonesia’s democratic transition," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 16(1), pages 24-49, March.
    7. Takahiro Akita & Sachiko Miyata, 2018. "Spatial Inequalities in Indonesia, 1996–2010: A Hierarchical Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(3), pages 829-852, August.
    8. Mitsuhiko Kataoka, 2018. "Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010," Asia-Pacific Journal of Regional Science, Springer, vol. 2(2), pages 297-313, August.
    9. Barron, Patrick & Kaiser, Kai & Pradhan, Menno, 2004. "Local conflict in Indonesia : Measuring incidence and identifying patterns," Policy Research Working Paper Series 3384, The World Bank.
    10. Takahiro Akita & Awaludin Aji Riadi & Ali Rizal, 2021. "Fiscal disparities in Indonesia in the decentralization era: Does general allocation fund equalize fiscal revenues?," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(6), pages 1842-1865, December.
    11. Fitria Fitrani & Bert Hofman & Kai Kaiser, 2005. "Unity in diversity? The creation of new local governments in a decentralising Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 57-79.
    12. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.
    13. Armida Alisjahbana & Takahiro Akita, 2020. "Economic Tertiarization and Regional Income Inequality in a Decentralized Indonesia: A Bi-dimensional Inequality Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 151(1), pages 51-80, August.
    14. Mitsuhiro Hayashi & Mitsuhiko Kataoka & Takahiro Akita, 2014. "Expenditure Inequality in Indonesia, 2008–2010: A Spatial Decomposition Analysis and the Role of Education," Asian Economic Journal, East Asian Economic Association, vol. 28(4), pages 389-411, December.
    15. Balisacan, Arsenio M. & Pernia, Ernesto M. & Asra, Abuzar, 2002. "Revisiting Growth and Poverty Reduction in Indonesia: What Do Subnational Data Show?," ADB Economics Working Paper Series 25, Asian Development Bank.
    16. Rita Silva & Alexandra Ferreira-Lopes, 2014. "A Regional Development Index for Portugal," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(3), pages 1055-1085, September.
    17. Pierskalla, Jan H. & Sacks, Audrey, 2017. "Unpacking the Effect of Decentralized Governance on Routine Violence: Lessons from Indonesia," World Development, Elsevier, vol. 90(C), pages 213-228.
    18. Muhammad Hidayat & Nasri Bachtiar & Sjafrizal Sjafrizal & Elvina Primayesa, 2023. "The Influence of Investment, Energy Infrastructure, and Human Capital Towards Convergence of Regional Disparities in Sumatra Island, Indonesia; Using Oil and Gas Data and Without Oil and Gas," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 139-149, July.
    19. Mitsuhiro Hayashi & Mitsuhiko Kataoka & Takahiro Akita, 2012. "Spatial Dimensions of Expenditure Inequality and the Role of Education in Indonesia: An Analysis of the 2008-2010 Susenas Panel," Working Papers EMS_2012_21, Research Institute, International University of Japan.
    20. Dhani Setyawan & Irwanda Wisnu Wardhana, 2020. "Energy Efficiency Development in Indonesia: An Empirical Analysis of Energy Intensity Inequality," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 68-77.
    21. Muhammad Hidayat & Nasri Bachtiar & Sjafrizal Sjafrizal & Elvina Primayesa, 2022. "Does Investment and Energy Infrastructure Influence Convergence in Sumatra Island, Indonesia?," International Journal of Energy Economics and Policy, Econjournals, vol. 12(4), pages 274-281, July.

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