Mulya Amri

A new index to measure ease of doing business at the sub-national level: Empirical findings from Indonesia

Purpose The purpose of this paper is to propose a novel framework to measure ease of doing business (EDB) that undertakes a holistic approach incorporating three distinct environments: attractiveness to investors, business friendliness, and competitive policies (ABC). This is offered as an alternative to existing popular indicators of doing business (DB), allowing for better approximation of investment and economic growth at the sub-national level. Design/methodology/approach The proposed “EDB Index ABC” aggregates 74 indicators into five sub-environments, three environments, and ultimately into the overall EDB Index ABC. Values are standardised using the standardised score method. The framework is applied to 33 Indonesian provinces using a combination of primary data from surveying the business community and government departments as well as secondary data from formal government statistics. Findings The findings suggest a positive association between the proposed EDB Index ABC and competitiveness as well as investments into Indonesian provinces. In terms of explanatory power, attractiveness to investors and business friendliness seem to be stronger and more consistent, while the role of competitive policies is more ambiguous. Originality/value This research departs significantly from conventional approaches to the study of DB that tend to overwhelmingly focus on formal regulatory aspects by including macroeconomic factors such as market potential and infrastructure resilience as well as micro-level variables such as profitability and cost effectiveness, and the role of government in managing competition. Responding to calls for a bottom-up approach in understanding the EDB, the EDB Index ABC is applied to 33 Indonesian provinces.

Slow Growth and Sluggish Manufacturing in Indonesia’s Less Competitive Provinces: A Geweke Causality Analysis

This article presents a causality analysis of lagging economic growth in two Indonesian provinces: East Nusa Tenggara and North Maluku. We identify three variables which stand out for some of Indonesia’s economically challenged provinces: consistently low gross domestic product (GDP) growth, low levels of manufacturing, and under-utilisation of labour. Using Geweke causality analysis, we identify and measure the direction of causal effects between these variables. Our empirical findings confirm that output growth is affected by the level of value addition in economic activities and the productivity of human resources. We find that both the secondary sector’s contribution to gross regional development product (GRDP) and labour productivity contribute to the changes in overall provincial GRDP, but not the other way around. Such findings suggest that development in Indonesia’s economically challenged provinces would benefit greatly from expansion of appropriate manufacturing and value added activities, and more productive utilization of labour force in full employment situations.

Institutions and the Policy Process 2.0: Implications of the IAD Framework

Much is known in the literature about institutions and the policy process. However, the literature generally tend to be implicit and Western centric and has not systematically studied the implications of institutional theory. In this chapter, we explore several implications of institutional theory for the policy process literature using the Institutional Analysis and Development Framework. We focus in particular on agenda setting, policy sub- systems, politics and policy, instrument choice, implementation, learning and isomorphism, the role of language and ideas and the importance of developing a set of diagnostic tools. Our aim is to start a conversation - which we refer to as policy process 2.0 - between scholars of institutions and policy studies. We argue that systematically linking institutional theory with the policy studies literature – using the IAD Framework – helps open up a promising research agenda.