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Regional Income Disparities, Distributional Convergence, and Spatial Effects: Evidence from Indonesia

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  • Gunawan, Anang
  • Mendez, Carlos
  • Santos-Marquez, Felipe

Abstract

Using a novel dataset, this paper studies the spatio-temporal dynamics of income per capita across provinces and districts in Indonesia over the 2000-2017 period. First, an exploratory spatial analysis suggests that spatial autocorrelation is only significant at the district level and it appears to be robust from 2013 to 2017. Thus, at the district level, we proceed to use a spatial filtering model for decomposing income into a spatially independent component and a spatial residual. Next, through the lens of a distributional convergence framework, we find that the non-filtered income is characterized by a lack of regional mobility. In contrast, the spatially independent component shows a pattern of polarization. We conclude arguing that neighbor effects have played a significant role in reducing regional polarization in Indonesia.

Suggested Citation

  • Gunawan, Anang & Mendez, Carlos & Santos-Marquez, Felipe, 2019. "Regional Income Disparities, Distributional Convergence, and Spatial Effects: Evidence from Indonesia," MPRA Paper 97090, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:97090
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    References listed on IDEAS

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    6. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
    7. Mendez-Guerra, Carlos, 2017. "Heterogeneous Growth and Regional (Di)Convergence in Bolivia: A Distribution Dynamics Approach," MPRA Paper 81060, University Library of Munich, Germany.
    8. Sergio Rey & Brett Montouri, 1999. "US Regional Income Convergence: A Spatial Econometric Perspective," Regional Studies, Taylor & Francis Journals, vol. 33(2), pages 143-156.
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    10. Danny Quah, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis (Now published in Scandinavian Journal of Economics 95 (4), 1993, pp.427-443.)," STICERD - Econometrics Paper Series 265, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    11. Yogi Vidyattama, 2013. "Regional convergence and the role of the neighbourhood effect in decentralised Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(2), pages 193-211, August.
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    Cited by:

    1. Venera Timiryanova & Konstantin Grishin & Dina Krasnoselskaya, 2020. "Spatial Patterns of Production-Distribution-Consumption Cycle: The Specifics of Developing Russia," Economies, MDPI, vol. 8(4), pages 1-18, October.
    2. Mitsuhiko Kataoka, 2022. "Cyclical shocks and spatial association of Indonesia's district‐level per capita income," Asian Economic Journal, East Asian Economic Association, vol. 36(3), pages 261-287, September.
    3. Carlos Mendez, 2020. "Regional efficiency convergence and efficiency clusters," Asia-Pacific Journal of Regional Science, Springer, vol. 4(2), pages 391-411, June.
    4. Mendez-Guerra, Carlos & Kataoka, Mitsuhiko, 2020. "Disparities in Regional Productivity, Capital Accumulation, and Efficiency across Indonesia: A Convergence Clubs Approach," MPRA Paper 99322, University Library of Munich, Germany.

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    More about this item

    Keywords

    Convergence; Getis filter; Nonparametric distribution; Indonesia;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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