Takahiro Akita

Interregional Inequalities in Indonesia: A Sectoral Decomposition Analysis for 1975–92

In this paper we examine interregional income inequalities in Indonesia from 1975 to 1992, Williamsons weighted coefficient of variation is used to measure interregional income inequality. We also perform a sectoral decomposition analysis to investigate the extent to which industrial sectors contribute to the overall weighted coefficient of variation. One major finding is that, although interregional income inequality remained fairly stable in non-mining GDP during the study period, it has undergone a significant change in structure. The contribution of the tertiary sector to inequality, though still dominant, has gradually declined. The secondary sector, meanwhile, is playing an increasingly important role, reflecting its growing share of GDP. Inequality is much smaller in consumption expenditure than in non-mining GDP. Its consistently high levels in fixed capital formation reflect the uneven distribution of investments over space in Indonesia.

REGIONAL INCOME INEQUALITY IN INDONESIA AND THE INITIAL IMPACT OF THE ECONOMIC CRISIS

This paper estimates regional income inequality from 1993 to 1998, using a Theil index based upon district-level GDP and population data. Between 1993 and 1997, when Indonesias annual average growth rate exceeded 7%, regional income inequality rose significantly. A two-stage nested inequality decomposition analysis indicates this was due mainly to an increase in within-province inequality, especially in Riau, Jakarta and West and East Java. In 1997, the within-province component represented about 50% of regional income inequality. The crisis caused per capita GDP growth to revert to its 1995 level, but the impact was spread unevenly across provinces and districts. In 1998 regional income inequality declined to its 1993-94 level. In contrast to 1993-97, three-quarters of the 1998 decline was due to a change in between-province inequality, with the Java-Bali region playing a prominent role. The crisis appears particularly to have afflicted urban Java and urban Sumatra.

Urbanization, Educational Expansion, and Expenditures Inequality in Indonesia in 1996, 1999, and 2002

This paper considers urban–rural location and education as the main factors of expenditure inequality, and attempts to examine inequality changes associated with urbanization and educational expansion in Indonesia. The urban sectors higher educational group is found to have contributed significantly to overall inequality. Its within-group inequality increased significantly. This, together with educational expansion, led to a conspicuous rise in urban inequality. Overall inequality rose, due not only to the rise in urban inequality but also a widening urban–rural disparity, accompanied by urbanization. To mitigate overall inequality, the government needs to introduce policies that could reduce inequality among households with a tertiary education.

Spatial Patterns of Expenditure Inequalities in Indonesia: 1987, 1990 and 1993

This article investigates the contribution of inter-regional disparity to total national inequality in household expenditure, by decomposing national inequality into within- and between-province components. This is done by applying the Theil inequality decomposition technique to household expenditure data from the National Socio-Economic Survey. Whereas inter-provincial disparity accounted for 12-14% of total inequality among urban households and 7-8% among rural households, urban-rural disparity accounted for 22-24% of total national inequality. A Kuznets curve drawn according to the 1993 Susenas data indicates a peak inequality value of 0.27 (using Theil index T) when the share of urban households reaches 53.2%; this share is much larger than the actual 1993 urbanisation level of 32.1%. Further urbanisation is therefore likely to raise total inequality, even if other conditions remain stable.

Inpres Desa Tertinggal (IDT) Program and Indonesian Regional Inequality

The objectives of this study are to examine the effects of the 1994–96 Inpres Desa Tertinggal** (IDT) programme in Indonesia on the change in intra-provincial inequality between 1993 and 1996. Through regression analysis, it was found that per capita IDT grants per province have a significant ameliorating effect on the change in intra-provincial expenditure inequality between 1993 and 1996. The inclusion of other plausible explanatory variables further clarifies the robust effects of the IDT programme. Overall, the IDT programme appears to have been successful in improving the economic conditions of the poorer households and in reducing the overall level of inequality.

Interregional Interdependence and Regional Economic Growth in Japan: An Input-Output Analysts

This article examines the sources of regional economic growth in Japan by using an extended growth-factor decomposition method based on an interregional input-output model. The extended formula avoids some problems of shift-share analyses and measures the roles played by interregional and interindustry linkages in the growth of a regional economy. This method can identify growth factors that originate outside a region as well as those that originate from within. Applying the method to Japanese interregional input-output tables reveals that interregional interdependence has exerted notable effects on regional economic growth in Japan and that regions are becoming more interdependent.

Interregional Interdependence and Regional Economic Growth: An Interregional Input‐Output Analysis of the Kyushu Region

The main objective of this paper is to examine the effects of the changes in economic conditions and government policies on the output growth of the Kyushu region between 1965 and 1990. This study uses the extended growth†factor decomposition method based on a three†region Japanese interregional input†output system consisting of Kyushu, Kanto, and the rest of Japan. The growth pattern of Kyushu changed noticeably over the period. The primary drivers of growth changed from the expansion of final demand within Kyushu to direct and indirect effects from outside Kyushu. This unambiguously indicates that Kyushu has facilitated interregional and international interdependence. The emergence of the processing and assembling sector, together with the construction of new networks of trunk railway lines, expressways, and communications, promoted closer interregional industrial linkages between Kyushu, Kanto, and the rest of Japan. In addition, the offshore transfer of production from Kyushu to Southeast Asia after the Plaza Accord Agreement strengthened Kyushu’s international industrial linkages.

The Sources of Industrial Growth in Indonesia, 1985–95: An Input-Output Analysis

This paper analyzes structural changes and the sources of industrial growth in Indonesia between 1985 and 1995 by using the 1985, 90, and 95 input-output tables. It also investigates the changes in the pattern of industrial growth over the 25-year period from 1971-95. In the past three decades, Indonesia appears to have achieved a successful transition from an inward-looking, government-led industrialization financed by oil exports to an outward-looking, market-oriented industrialization based on non-oil exports, in which the turning period was during the 1980-85 period. During 1985-95, the expansion of household consumption remained the main source of output growth as it accounted for about one-half of total output growth; in contrast, the contribution of government consumption was reduced to a negligible level, signifying the declining role of the government sector in output growth. The expansion of exports was also a key factor in output growth in addition to the rise in export-oriented investments. It is noteworthy that export expansion was made, to a large extent, by non-oil exports, rather than oil exports.

The Role of the Kanto Region in the Growth of Japanese Regional Economies 1965–1985: An Extended Growth-Factor Decomposition Analysis

In an earlier paper, Akita (1994) developed an extended growth-factor decomposition method based on the two-region interregional input-output system presented by Isard (1951). The decomposition was an extension of the method based on a single-region or a national input-output System (see Akita, 1991; Akita, 1992; Chenery, 1980; Chenery et al., 1962; Chenery and Syrquin, 1979; Dervis et al., 1982; Fujita and James, 1987; Kubo et al., 1986; Lee and Schluter, 1993; Martin and Holland, 1992; Urata, 1987). The extended growth-factor decomposition formula measures the roles played by interindustry and interregional linkages in the growth of a regional economy and avoids some of the problems of shift-share analyses. This method can identify growth factors that originate outside a region as well as those that originate from within. Applying the method to the Japanese two-region interregional input-output tables between 1975 and 1985, it was shown that interregional interdependence had exerted notable effects on regional economic growth in Japan and that the regions were becoming more interdependent.