Analysis of regional growth and disparity: The impact analysis of the Inpres project on Indonesian development
The main objectives of this study are three-fold: (i) to analyze the process of regional growth, focusing on the pattern of interregional income (product) disparity, (ii) to analyze, in the case of Indonesian development the impact of Inpres and government expenditures on regional product disparity, as well as effects on growth, (iii) and to analyze the impacts of the Inpres and government expenditures on output and income. To analyze the impact of Inpres and government expenditures on regional product disparity, two-variable regression models were applied, where the regional product disparity is the dependent variable and Inpres is the independent variable. To analyze the impacts of Inpres and government expenditures on output and income, demand and supply sides of static input-output models were used. This study supports Williamson's hypothesis that in the early stages of economic development regional income (product) disparity rises. It is difficult to say whether a decline since 1983 in regional product disparity, as demonstrated in this study, is due to the more mature stages of national growth and development (as Williamson would suggest). There is a positive relationship between Inpres and government expenditures, and regional product disparity (even though the coefficient is very small): The higher Inpres or government expenditures, the higher the regional product disparity. This happens because richest regions tend to receive the greatest amount (per capita) of revenues from the central government and the impacts of Inpres and government expenditures on output and income in poor regions are lower than in developed regions. It is a common phenomenon in the early stage of development that in order to achieve rapid economic growth the government will push investment as much as possible. Further, the bulk of private investments generally locate in developed areas which have markets, cheap power, banking, insurance, modern means of transport, and other services. In order to support these new investments, the government has to create more infrastructure, a process with effects which aid the wealthier core areas.
Urban planning|Area planning & development|Public administration|Economics
Ardani, Amiruddin, "Analysis of regional growth and disparity: The impact analysis of the Inpres project on Indonesian development" (1992). Dissertations available from ProQuest. AAI9227606.