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Why Do Differences in Provincial Incomes Persist in Indonesia?

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  • Jorge Garcia Garcia
  • Lana Soelistianingsih

Abstract

Despite 20 years of sustained economic growth that saw provincial GDPs rise and inequalities in per capita provincial GDPs fall, per capita income disparities among provinces persist. In this paper we present evidence that poor provinces have tended to catch up with middle- and high-income provinces, hut that regions at the top and bottom of the distribution in 1975 finished. In similar positions in 1993 lnvestments in human capital (education and health) seem to be the most effective way of increasing provincial incomes and reducing the disparities in provincial GDP per capita. The poorer provinces and rural areas can grow faster than the richer ones because they can gain the most from better health and education, they have the highest rates of illiteracy, fertility, and infant, child and maternal mortality.

Suggested Citation

  • Jorge Garcia Garcia & Lana Soelistianingsih, 1998. "Why Do Differences in Provincial Incomes Persist in Indonesia?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 95-120.
  • Handle: RePEc:taf:bindes:v:34:y:1998:i:1:p:95-120
    DOI: 10.1080/00074919812331337290
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    References listed on IDEAS

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    1. Takahiro Akita, 2002. "Income Inequality in Indonesia," Working Papers EMS_2002_02, Research Institute, International University of Japan.
    2. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
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    Cited by:

    1. Hal HILL, 2008. "Globalization, Inequality, and Local-level Dynamics: Indonesia and the Philippines," Asian Economic Policy Review, Japan Center for Economic Research, vol. 3(1), pages 42-61.
    2. Hal Hill & Budy Resosudarmo & Yogi Vidyattama, 2008. "Indonesia'S Changing Economic Geography," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(3), pages 407-435.
    3. Shankar, Raja & Shah, Anwar, 2003. "Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities," World Development, Elsevier, vol. 31(8), pages 1421-1441, August.
    4. 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.
    5. Takahiro Akita & Puji Agus Kurniawan & Sachiko Miyata, 2011. "Structural Changes and Regional Income Inequality in Indonesia: A Bidimensional Decomposition Analysis," Asian Economic Journal, East Asian Economic Association, vol. 25(1), pages 55-77, March.
    6. Xuan-Binh Vu & Son Nghiem, 2016. "Analysis of GDP trends and inequalities in Vietnam`s provinces and groups of provinces," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 6(7), pages 167-186, July.
    7. Takahiro Akita, 2002. "Regional Income Inequality In Indonesia And The Initial Impact Of The Economic Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 201-222.
    8. Bert Hofman & Susana Cordeira Guerra, 2004. "Ensuring Inter-regional Equity and Poverty Reduction," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0411, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. McCulloch, Neil & Sjahrir, Bambang Suharnoko, 2008. "Endowments, location or luck ? evaluating the determinants of sub-national growth in decentralized Indonesia," Policy Research Working Paper Series 4769, The World Bank.
    10. Mitsuhiko Kataoka, 2015. "Interprovincial differences in the endowment and utilization in labour force by educational attainment in Indonesia's post-crisis economy," ERSA conference papers ersa15p878, European Regional Science Association.
    11. Jorge Garcia Garcia, 2000. "Indonesia's Trade and Price Interventions: Pro-Java and Pro-Urban," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(3), pages 93-112.
    12. Yogi Vidyattama, 2016. "Inter-provincial migration and 1975–2005 regional growth in Indonesia," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 87-105, March.
    13. 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.

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