Nurina Merdikawati

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.

Agricultural Productivity in Indonesian Provinces

Indonesia has been recognized as a country with significant potential in agriculture, not only to be self-sufficient in terms of food, but also to be the “food basket†for the world. However, given limited and competing use of resources, raising agricultural productivity is of paramount importance. To date, most of the existing work on Indonesias agricultural sector is at the national level. Considering the extent of Indonesias regional diversity, a provincial-level analysis of the countrys agricultural sector would be more useful from a policy perspective. In this light, this paper examines agricultural productivity growth in Indonesian provinces during 2000-2011 and draws policy implications from such empirical analysis. The paper uses two methodologies, namely growth accounting and Malmquist index data envelopment analysis. Results suggest that technological change has been improving for most provinces, though there is wide variation in technical efficiency change which in turn is driving differences in total factor productivity growth across provinces.