Regional Convergence and the Role of the Neighbourhood Effect in Decentralised Indonesia

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    Abstract

    More than a decade since Indonesia's radical decentralisation process commenced, this article examines whether the economic performance of neighbouring regions – the neighbourhood effect – can determine the speed of regional convergence. The results suggest that the inequality of gross regional domestic product per capita, as indicated by the Williamson index of regional inequality, may increase slightly in times of insignificant estimated speeds of convergence – especially because of the growth of Jakarta. In contrast, changes in the Human Development Index numbers for Indonesia indicate that regional convergence is taking place, although its speed is decreasing. The neighbourhood effect could be significant in both cases, but it has had little effect on the speed of convergence
    Original languageEnglish
    Pages (from-to)193-211
    Number of pages19
    JournalBulletin of Indonesian Economic Studies
    Volume49
    Issue number2
    DOIs
    Publication statusPublished - 2013

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