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Determining optimal location of new growth centers based on LGP–IRIO model to reduce regional disparity in Indonesia

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  • Didit Pribadi
  • Andi Putra
  • Ernan Rustiadi

Abstract

Development policy that mainly focuses on economic growth has triggered increasing regional disparity in Indonesia, exacerbated by the concentrated development of growth centers that generate backwash effects rather than spillover effects. Balanced regional development is needed and can be initiated through a spatial system approach, where the growth centers and their hinterlands are developed simultaneously as an integrated system. The aim of this research is to define new growth centers that can stimulate the optimal utilization and interaction between regional resources for generating more balanced and efficient development. Three interrelated models are developed to address this: (1) an inter-regional input–output (IRIO) optimization model to generate optimal resource use and improve development performances, (2) a transport model to determine an optimal inter-regional input–output network, and (3) a P-median model to define new growth centers and their hinterland areas. Results from the first model show that setting land resource limitations, demand compliance, and goals to increase economic growth, people’s income, and government tax can create higher and equally distributed value of total output. The second model indicated that the optimal flow of input–output increased intensity of economic transaction among provinces, although it was still dominated by interaction between Java and Sumatra. The third model identified seven new growth centers comprising Medan, Tanjungpinang, Palembang, Balikpapan, Gorontalo, Makassar, and Ternate. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Didit Pribadi & Andi Putra & Ernan Rustiadi, 2015. "Determining optimal location of new growth centers based on LGP–IRIO model to reduce regional disparity in Indonesia," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 89-115, January.
    • Handle: RePEc:spr:anresc:v:54:y:2015:i:1:p:89-115
    DOI: 10.1007/s00168-014-0647-8
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    References listed on IDEAS

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    1. Hal Hill & Budy Resosudarmo & Yogi Vidyattama, 2008. "Indonesia'S Changing Economic Geography," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(3), pages 407-435.
    2. Glenn-Marie Lange, 1998. "Applying an Integrated Natural Resource Accounts and Input-Output Model to Development Planning in Indonesia," Economic Systems Research, Taylor & Francis Journals, vol. 10(2), pages 113-134.
    3. Shanzi Ke & Edward Feser, 2010. "Count on the Growth Pole Strategy for Regional Economic Growth? Spread-Backwash Effects in Greater Central China," Regional Studies, Taylor & Francis Journals, vol. 44(9), pages 1131-1147.
    4. Edison Hulu & Geoffrey J.D. Hewings, 1993. "The Development And Use Of Interregional Input†Output Models For Indonesia Under Conditions Of Limited Information," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 5(2), pages 135-153, July.
    5. Anping Chen & Mark D. Partridge, 2013. "When are Cities Engines of Growth in China? Spread and Backwash Effects across the Urban Hierarchy," Regional Studies, Taylor & Francis Journals, vol. 47(8), pages 1313-1331, September.
    6. Mark Partridge & Ray D. Bollman & M. Rose Olfert & Alessandro Alasia, 2007. "Riding the Wave of Urban Growth in the Countryside: Spread, Backwash, or Stagnation?," Land Economics, University of Wisconsin Press, vol. 83(2), pages 128-152.
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    Cited by:

    1. Shanming Jia & Chenglin Qin & Xinyue Ye, 2018. "The evolution of regional multi-pole growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(1), pages 189-207, July.
    2. Andi Syah Putra & Guangji Tong & Didit Okta Pribadi, 2020. "Spatial Analysis of Socio-Economic Driving Factors of Food Expenditure Variation between Provinces in Indonesia," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    3. Achmad Tjahja Nugraha & Gunawan Prayitno, 2020. "Regional Disparity in Western and Eastern Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 101-110.

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    More about this item

    Keywords

    R12; R15;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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