IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2022-04-30.html
   My bibliography  Save this article

Does Investment and Energy Infrastructure Influence Convergence in Sumatra Island, Indonesia?

Author

Listed:
  • Muhammad Hidayat

    (Doctoral Student in Economics, Faculty of Economics and Business, Andalas University, Padang, Indonesia; & Department of Economics, Faculty of Economics and Business, Universitas Muhammadiyah Riau, Pekanbaru, Indonesia)

  • Nasri Bachtiar

    (Department of Economics, Faculty of Economics and Business, Andalas University, Padang, Indonesia.)

  • Sjafrizal Sjafrizal

    (Department of Economics, Faculty of Economics and Business, Andalas University, Padang, Indonesia.)

  • Elvina Primayesa

    (Department of Economics, Faculty of Economics and Business, Andalas University, Padang, Indonesia.)

Abstract

This research aims to prove the existence of a convergence process and analyse the effect of investment and energy infrastructure on the convergence process on Sumatra Island by including the element of space to understand spatial convergence better. The dataset used in panel data consists of 154 regions (district/municipality) from 2010 to 2020. The analytical tools used with a spatial econometric approach consist of Spatial Autoregressive (SAR) and Spatial Error Model (SEM). The results of the convergence test prove that there is convergence in both absolute and conditional convergence, and there is a difference in the speed of convergence for the two equations. Meanwhile, the results of the spatial approach state that there are spatial dependencies so that neighbouring regions influence the region. The estimation results of conditional -convergence reveal that investment and government spending in infrastructure has a positive and significant effect, in contrast to energy infrastructure, which has a negative and significant relationship, and only human capital is not significant to the convergence process in Sumatra.

Suggested Citation

  • Muhammad Hidayat & Nasri Bachtiar & Sjafrizal Sjafrizal & Elvina Primayesa, 2022. "Does Investment and Energy Infrastructure Influence Convergence in Sumatra Island, Indonesia?," International Journal of Energy Economics and Policy, Econjournals, vol. 12(4), pages 274-281, July.
    • Handle: RePEc:eco:journ2:2022-04-30
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/13214/6841
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/13214
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zizi GOSCHIN, 2017. "Exploring regional economic convergence in Romania. A spatial modeling approach," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 8, pages 127-146, December.
    2. Ahmet Kýndap & Tayyar Dogan, 2019. "Regional Economic Convergence and Spatial Spillovers in Turkey," International Econometric Review (IER), Econometric Research Association, vol. 11(1), pages 1-23, April.
    3. Weili Zhang & Wei Xu & Xiaoye Wang, 2019. "Regional convergence clubs in China: identification and conditioning factors," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(2), pages 327-350, April.
    4. Marcos Sanso-Navarro & María Vera-Cabello & Miguel Puente-Ajovín, 2020. "Regional convergence and spatial dependence: a worldwide perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(1), pages 147-177, August.
    5. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
    6. Jihai Yu & Lung-Fei Lee, 2012. "Convergence: A Spatial Dynamic Panel Data Approach," Global Journal of Economics (GJE), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-36.
    7. Aparna Lolayekar & Pranab Mukhopadhyay, 2017. "Growth Convergence and Regional Inequality in India (1981–2012)," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(2), pages 307-328, June.
    8. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    9. Jülide Yildirim & Nadir Öcal & Süheyla Özyildirim, 2009. "Income Inequality and Economic Convergence in Turkey: A Spatial Effect Analysis," International Regional Science Review, , vol. 32(2), pages 221-254, April.
    10. Emma Hooper & Sanjay Peters & Patrick A. Pintus, 2021. "The impact of infrastructure investments on income inequality: Evidence from US states," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(2), pages 227-256, April.
    11. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    12. Roberta Capello & Peter Nijkamp (ed.), 2009. "Handbook of Regional Growth and Development Theories," Books, Edward Elgar Publishing, number 12874.
    13. Alexander Kubis & Lutz Schneider, 2016. "Regional Migration, Growth and Convergence – A Spatial Dynamic Panel Model of Germany," Regional Studies, Taylor & Francis Journals, vol. 50(11), pages 1789-1803, November.
    14. Mindaugas Butkus & Diana Cibulskiene & Alma Maciulyte-Sniukiene & Kristina Matuzeviciute, 2018. "What Is the Evolution of Convergence in the EU? Decomposing EU Disparities up to NUTS 3 Level," Sustainability, MDPI, vol. 10(5), pages 1-37, May.
    15. Mustafa Gömleksiz & Ahmet Şahbaz & Birol Mercan, 2017. "Regional Economic Convergence in Turkey: Does the Government Really Matter for?," Economies, MDPI, vol. 5(3), pages 1-16, July.
    16. Hengky Kurniawan & Henri L. F. de Groot & Peter Mulder, 2019. "Are poor provinces catching‐up the rich provinces in Indonesia?," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(1), pages 89-108, March.
    17. Tirtha Chatterjee, 2017. "Spatial Convergence and Growth in Indian Agriculture: 1967–2010," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(1), pages 121-149, March.
    18. Xavier Fageda & Cecilia Olivieri, 2019. "Transport infrastructure and regional convergence: A spatial panel data approach," Papers in Regional Science, Wiley Blackwell, vol. 98(4), pages 1609-1631, August.
    19. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    20. Muhammad Hidayat & Ranti Darwin & M. Fikry Hadi, 2020. "Does Energy Infrastructure Reduce Inequality Inter-regional in Riau Province, Indonesia?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 160-164.
    21. Robert J. Barro, 2015. "Convergence and Modernisation," Economic Journal, Royal Economic Society, vol. 125(585), pages 911-942, June.
    22. Christian Lessmann, 2016. "Regional Inequality and Internal Conflict," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 157-191, May.
    23. J. Paul Elhorst, 2003. "Specification and Estimation of Spatial Panel Data Models," International Regional Science Review, , vol. 26(3), pages 244-268, July.
    24. Fang Yang & Shiying Pan & Xin Yao, 2016. "Regional Convergence and Sustainable Development in China," Sustainability, MDPI, vol. 8(2), pages 1-15, January.
    25. repec:idn:journl:v:17:y:2014:i:1c:p:1-38 is not listed on IDEAS
    26. Jong‐Wha Lee, 2020. "Convergence Success and the Middle‐Income Trap," The Developing Economies, Institute of Developing Economies, vol. 58(1), pages 30-62, March.
    27. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    28. Yogi Vidyattama, 2013. "Regional convergence and the role of the neighbourhood effect in decentralised Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(2), pages 193-211, August.
    29. Shankar, Raja & Shah, Anwar, 2003. "Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities," World Development, Elsevier, vol. 31(8), pages 1421-1441, August.
    30. Federico Belotti & Gordon Hughes & Andrea Piano Mortari, 2017. "Spatial panel-data models using Stata," Stata Journal, StataCorp LP, vol. 17(1), pages 139-180, March.
    31. Xiangwei Sun & Fei Chen & Geoffrey J. D. Hewings, 2017. "Spatial Perspective on Regional Growth in China: Evidence from an Extended Neoclassic Growth Model," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(9), pages 2063-2081, September.
    32. Roberta Capello & Peter Nijkamp, 2011. "Regional Growth and Development Theories Revisited," Chapters, in: Robert Stimson & Roger R. Stough & Peter Nijkamp (ed.), Endogenous Regional Development, chapter 15, Edward Elgar Publishing.
    33. Mohammad Zulfan Tadjoeddin & Widjajanti I. Suharyo & Satish Mishra, 2001. "Regional Disparity and Vertical Conflict in Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 6(3), pages 283-304.
    34. Yeycol Leiva & Gabriel Pino, 2020. "Analysis of the impact of school performance on income inequality in the long run: An application to Chilean municipalities," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1045-1080, September.
    35. Guanghua Wan & Peter J. Morgan & Robert J. Barro, 2016. "Economic Growth and Convergence, Applied to China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(5), pages 5-19, September.
    36. Robert J. Barro, 2016. "Economic Growth and Convergence, Applied Especially to China," NBER Working Papers 21872, National Bureau of Economic Research, Inc.
    37. Stilianos Alexiadis, 2013. "Convergence Clubs and Spatial Externalities," Advances in Spatial Science, Springer, edition 127, number 978-3-642-31626-5.
    38. Zhang, Xiaobei & Li, Haizheng & Wang, Xiaojun & Fleisher, Belton M., 2019. "Human Capital and the Economic Convergence Mechanism: Evidence from China," IZA Discussion Papers 12224, Institute of Labor Economics (IZA).
    39. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
    40. Sergio Rey & Brett Montouri, 1999. "US Regional Income Convergence: A Spatial Econometric Perspective," Regional Studies, Taylor & Francis Journals, vol. 33(2), pages 143-156.
    41. Kant, Chander, 2019. "Income convergence and the catch-up index," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 613-627.
    42. Aginta, Harry & Gunawan, Anang Budi & Mendez, Carlos, 2020. "Regional Income Disparities and Convergence Clubs in Indonesia: New District-Level Evidence 2000-2017," MPRA Paper 99079, University Library of Munich, Germany.
    43. Douglass C. North, 1955. "Location Theory and Regional Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 63(3), pages 243-243.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rusiadi Rusiadi & Muhammad Hidayat & Dewi Mahrani Rangkuty & Kiki Farida Ferine & Jumadil Saputra, 2024. "The Influence of Natural Resources, Energy Consumption, and Renewable Energy on Economic Growth in ASEAN Region Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 332-338, May.
    2. Muhammad Hidayat & Nasri Bachtiar & Sjafrizal Sjafrizal & Elvina Primayesa, 2023. "The Influence of Investment, Energy Infrastructure, and Human Capital Towards Convergence of Regional Disparities in Sumatra Island, Indonesia; Using Oil and Gas Data and Without Oil and Gas," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 139-149, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Hidayat & Nasri Bachtiar & Sjafrizal Sjafrizal & Elvina Primayesa, 2023. "The Influence of Investment, Energy Infrastructure, and Human Capital Towards Convergence of Regional Disparities in Sumatra Island, Indonesia; Using Oil and Gas Data and Without Oil and Gas," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 139-149, July.
    2. Ahmet Kýndap & Tayyar Dogan, 2019. "Regional Economic Convergence and Spatial Spillovers in Turkey," International Econometric Review (IER), Econometric Research Association, vol. 11(1), pages 1-23, April.
    3. Zhang, Xiaobei & Wang, Xiaojun, 2021. "Measures of human capital and the mechanics of economic growth," China Economic Review, Elsevier, vol. 68(C).
    4. Cristian Incaltarau & Gabriela Carmen Pascariu & Adelaide Duarte & Peter Nijkamp, 2021. "Migration, regional growth and convergence: a spatial econometric study on Romania," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(3), pages 497-532, June.
    5. Ronny Correa-Quezada & Lucía Cueva-Rodríguez & José Álvarez-García & María de la Cruz del Río-Rama, 2020. "Application of the Kernel Density Function for the Analysis of Regional Growth and Convergence in the Service Sector through Productivity," Mathematics, MDPI, vol. 8(8), pages 1-20, July.
    6. Dimitar Eftimoski, 2020. "Some new insights on economic convergence and growth in Central, Eastern, and Southeastern Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 863-884, November.
    7. Vítor João Pereira Domingues Martinho, 2021. "Impact of Covid‐19 on the convergence of GDP per capita in OECD countries," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(S1), pages 55-72, November.
    8. Alfredo Cartone & Paolo Postiglione, 2016. "Modelli spaziali di regressione quantilica per l?analisi della convergenza economica regionale," RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO, FrancoAngeli Editore, vol. 2016(3), pages 28-48.
    9. Johan Lundberg, 2006. "Using spatial econometrics to analyse local growth in Sweden," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 303-316.
    10. Stephen Dobson & Carlyn Ramlogan & Eric Strobl, 2006. "Why Do Rates Of Β‐Convergence Differ? A Meta‐Regression Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 153-173, May.
    11. Postiglione, Paolo & Benedetti, Roberto & Lafratta, Giovanni, 2010. "A regression tree algorithm for the identification of convergence clubs," Computational Statistics & Data Analysis, Elsevier, vol. 54(11), pages 2776-2785, November.
    12. Cristina D. Checherita, 2009. "Variations on economic convergence: The case of the United States," Papers in Regional Science, Wiley Blackwell, vol. 88(2), pages 259-278, June.
    13. Breandán Ó hUallacháin, 2007. "Regional Growth in a Knowledge-based Economy," International Regional Science Review, , vol. 30(3), pages 221-248, July.
    14. Anang Budi Gunawan & Carlos Mendez & Shigeru Otsubo, 2021. "Provincial income convergence clubs in Indonesia: Identification and conditioning factors," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2540-2575, December.
    15. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796, Elsevier.
    16. Yogi Vidyattama, 2016. "Inter-provincial migration and 1975–2005 regional growth in Indonesia," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 87-105, March.
    17. Adiwan F. Aritenang, 2021. "The Importance of Agglomeration Economies and Technological Level on Local Economic Growth: the Case of Indonesia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 544-563, June.
    18. Oshchepkov, Aleksey & Lehmann, Hartmut & Silvagni, Maria Giulia, 2023. "Regional convergence in Russia: Estimating an augmented Solow model," Economic Systems, Elsevier, vol. 47(4).
    19. ?gel de la Fuente, "undated". "Convergence Across Countries And Regions: Theory And Empirics," UFAE and IAE Working Papers 447.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    20. Matthew Higgins & Daniel Levy & Andrew T. Young, 2003. "Growth and Convergence across the US: Evidence from County-Level Data," Working Papers 2003-03, Bar-Ilan University, Department of Economics.

    More about this item

    Keywords

    Convergence; Investment; Energy Infrastructure; Spatial Panel Data; Sumatra;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2022-04-30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.