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Creating New Regions, Improving Regional Welfare Equality?

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  • Aloysius Gunadi, Brata

Abstract

In concurrent with reformation and decentralization, number of sub-national administrative in Indonesia increase significantly. Existing regions has been splitting to create new regions. As the result, number of municipalities and districts in Indonesia in recent years are more than 450. The creation of new regions has been expected will increase citizens’ welfare in the regions and reduce regional inequality. However, indicative evidences shows negative impacts of this reform such as increase of inefficient administration cost of government, decrease capacity to deliver public services and increase potential for inter-group conflict. All of these indicative evidences will affect the welfare of citizens as seen on the human development indicators. Based on this background, the aim of this article is to analyze the relation of creation of new regions with the evolution of regional welfare inequality. The study employed human development index (HDI) at sub-national level (kota/kabupaten) as the indicator of welfare. The evolution of regional inequality of the HDI is analyzed by comparing coefficient of variation in the HDI from 1996 to 2005. This paper also estimated a preliminary empirical model to assess the impact of pemekaran on the within province inequality. The policy implication of this finding is that pemekaran should be controlled.

Suggested Citation

  • Aloysius Gunadi, Brata, 2008. "Creating New Regions, Improving Regional Welfare Equality?," MPRA Paper 12540, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:12540
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    References listed on IDEAS

    as
    1. Hal HILL & Takashi SHIRAISHI, 2007. "Indonesia After the Asian Crisis," Asian Economic Policy Review, Japan Center for Economic Research, vol. 2(1), pages 123-141, June.
    2. Takahiro Akita, 2002. "Income Inequality in Indonesia," Working Papers EMS_2002_02, Research Institute, International University of Japan.
    3. 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.
    4. 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.
    5. Daniel Suryadarma & Wenefrida Dwi Widyanti & Asep Suryahadi & Sudarno Sumarto, "undated". "From Access to Income: Regional and Ethnic Inequality in Indonesia," Working Papers 356, Publications Department.
    6. 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.
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    Cited by:

    1. James CUST & Ridwan D. RUSLI, 2014. "The economic spillovers from resource extraction: a partial resource blessing at the subnational level?," Economic Growth Centre Working Paper Series 1402, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.

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    More about this item

    Keywords

    new region; ‘pemekaran’; human development index; inequality;
    All these keywords.

    JEL classification:

    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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