The Impact of Regional Development Policy on Regional Inequality in Indonesia: an Inter-Regional computable General Equilibrium Model Analysis

Gunawan, Anang Budi (2013). The Impact of Regional Development Policy on Regional Inequality in Indonesia: an Inter-Regional computable General Equilibrium Model Analysis Master's Thesis, School of Economics, The University of Queensland.

       
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Author Gunawan, Anang Budi
Thesis Title The Impact of Regional Development Policy on Regional Inequality in Indonesia: an Inter-Regional computable General Equilibrium Model Analysis
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2013-11
Thesis type Master's Thesis
Supervisor A/Prof. John Asafu-Adjaye
Total pages 148
Language eng
Subjects 14 Economics
Formatted abstract

Development in Indonesia is characterised by the disparity among regions in which the eastern part of Indonesia lags far behind the western part. Since the implementation of the decentralisation system in the 2000s, Indonesia has achieved sustained growth and poverty reduction. However, such a development achievement has not had a significantly positive impact on equality in Indonesia. This study sets out to describe the source of disparity among regions in Indonesia as well as to identify several policy alternatives to reduce the disparity. A review of the literature shows the disparity in regional development in Indonesia to be a crucial problem. The development of economic and social infrastructure by provinces shows a huge gap between Java Island and the eastern part of Indonesia. Therefore the development of the eastern part of Indonesia should be focused on improving the main primary sectors, improving the quality of human resources and infrastructural development, which can be realised with funds from the budget allocation from the central government.

Using an Inter Regional Computable General Equilibrium model developed by Resosudarmo et al. (2009a), this study analyses the impact of several policy alternatives including fiscal transfer allocation on Eastern Indonesia. The analysis captures the impacts of the policies on key macroeconomic indicators such as economic growth, poverty and income distribution. The results show that all the policy scenarios have significant effects on economic growth and poverty but have a negligible effect on income distribution. The results suggest that compared to infrastructure development, investment in human quality improvement and the main primary sectors can be more effective in helping Eastern Indonesia to catch up with the other regions.

Keyword Indonesia
Computable general equilibrium modeling
Regional Disparity
Poverty
Gini coefficient
Economic growth

Document type: Thesis
Collection: UQ Theses (non-RHD) - UQ staff and students only
 
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Created: Mon, 23 Dec 2013, 08:49:26 EST by Yu-lin Huang on behalf of Scholarly Communication and Digitisation Service