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Infrastructure Improvement and Its Impact on Indonesian Economic Performance


  • Djoni Hartono

    () (Graduate Program in Economics, Faculty of Economics and Business, University of Indonesia)

  • Tony Irawan

    () (Department of Economics,Faculty of Economics and Management, Bogor Agricultural University IPB)

  • Ferry Irawan

    () (Fiscal Policy Office - Ministry of Finance)


Indonesian government shows big commitment on the improvement of infrastructure which is reflected in some regulations and policies. It is supported by many empirical evidences that show the importance of infrastructure improvement on economic performance. In this paper, we develop a CGE model to analyze the impact of infrastructure on Indonesian economy by introducing several types of infrastructure and also discuss the impact of infrastructure on the poverty level. The results suggest that improvement on any types of infrastructure is expected will increase economic growth, raise government revenue, raise factor’s income and reduce the poverty level. Improvement on public work of agriculture, land transportation and telecommunication are still preferable option relative to others. Interestingly, even though public work of agriculture usually is located in rural areas, but the model suggest that public work of agriculture improvement will result higher impact on urban household relative to rural household.

Suggested Citation

  • Djoni Hartono & Tony Irawan & Ferry Irawan, 2010. "Infrastructure Improvement and Its Impact on Indonesian Economic Performance," Working Papers in Economics and Development Studies (WoPEDS) 201008, Department of Economics, Padjadjaran University, revised Dec 2010.
  • Handle: RePEc:unp:wpaper:201008

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    References listed on IDEAS

    1. Sahu, Santosh & Narayanan, K, 2009. "Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing," MPRA Paper 16606, University Library of Munich, Germany.
    2. Zhang, ZhongXiang, 2003. "Why did the energy intensity fall in China's industrial sector in the 1990s? The relative importance of structural change and intensity change," Energy Economics, Elsevier, vol. 25(6), pages 625-638, November.
    3. Gale A. Boyd and Joseph M. Roop, 2004. "A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-102.
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