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Regional Income Inequality In Indonesia And The Initial Impact Of The Economic Crisis

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  • Takahiro Akita

Abstract

This paper estimates regional income inequality from 1993 to 1998, using a Theil index based upon district-level GDP and population data. Between 1993 and 1997, when Indonesia's annual average growth rate exceeded 7%, regional income inequality rose significantly. A two-stage nested inequality decomposition analysis indicates this was due mainly to an increase in within-province inequality, especially in Riau, Jakarta and West and East Java. In 1997, the within-province component represented about 50% of regional income inequality. The crisis caused per capita GDP growth to revert to its 1995 level, but the impact was spread unevenly across provinces and districts. In 1998 regional income inequality declined to its 1993-94 level. In contrast to 1993-97, three-quarters of the 1998 decline was due to a change in between-province inequality, with the Java-Bali region playing a prominent role. The crisis appears particularly to have afflicted urban Java and urban Sumatra.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:bindes:v:38:y:2002:i:2:p:201-222
    DOI: 10.1080/000749102320145057
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    References listed on IDEAS

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    Cited by:

    1. Mitsuhiko Kataoka, 2016. "Interprovincial efficiency differentials in Indonesia's pre-and post-crisis economy," ERSA conference papers ersa16p412, European Regional Science Association.
    2. Aloysius Gunadi, Brata, 2008. "Creating New Regions, Improving Regional Welfare Equality?," MPRA Paper 12540, University Library of Munich, Germany.
    3. 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.
    4. Aloysius Gunadi Brata, 2004. "Spatial Dynamic Of Small And Medium Enterprises In The Recent Economic Crisis," Urban/Regional 0409003, EconWPA.
    5. 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.
    6. Hiroshi Sakamoto, 2013. "Intra-regional Disparity and Municipal Merger: Case Study in Fukuoka Prefecture," ERSA conference papers ersa13p110, European Regional Science Association.
    7. Irwan Trinugroho & Agusman Agusman & Mochammad Doddy Ariefianto & Darsono Darsono & Amine Tarazi, 2015. "Determinants of cross regional disparity in financial deepening: Evidence from Indonesian provinces," Economics Bulletin, AccessEcon, vol. 35(2), pages 896-910.
    8. World Bank, 2003. "Decentralizing Indonesia : A Regional Public Expenditure Review Overview Report," World Bank Other Operational Studies 14632, The World Bank.
    9. Mitsuhiko Kataoka, 2013. "Capital Stock Estimates by Province and Interprovincial Distribution in Indonesia," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 409-428, December.
    10. 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.
    11. Abdul Jabbar Abdullah & Hristos Doucouliagos & Elizabeth Manning, 2015. "Are regional incomes in Malaysia converging?," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 69-94, November.
    12. 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.
    13. Tirtosuharto, Darius, 2013. "Regional Inequality in Indonesia: Did Convergence Occur Following the 1997 Financial Crisis?," MPRA Paper 70797, University Library of Munich, Germany.
    14. Mitsuhiko Kataoka & Kodrat Wibowo, 2014. "Decentralization and Spatial Allocation Policy of Public Investment in Indonesia and Japan," Working Papers in Economics and Development Studies (WoPEDS) 201403, Department of Economics, Padjadjaran University, revised Feb 2014.
    15. Daniel Suryadarma & Wenefrida Widyanti & Asep Suryahadi & Sudarno Sumarto, 2006. "From Access to Income : Regional and Ethnic Inequality in Indonesia," Development Economics Working Papers 22547, East Asian Bureau of Economic Research.
    16. Daniel Suryadarma & Rima Prama Artha & Asep Suryahadi & Sudarno Sumarto, 2005. "A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia," Development Economics Working Papers 22543, East Asian Bureau of Economic Research.
    17. 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.

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