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Why Do Differences in Provincial Incomes Persist in Indonesia?

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  • Jorge Garcia Garcia
  • Lana Soelistianingsih

Abstract

Despite 20 years of sustained economic growth that saw provincial GDPs rise and inequalities in per capita provincial GDPs fall, per capita income disparities among provinces persist. In this paper we present evidence that poor provinces have tended to catch up with middle- and high-income provinces, hut that regions at the top and bottom of the distribution in 1975 finished. In similar positions in 1993 lnvestments in human capital (education and health) seem to be the most effective way of increasing provincial incomes and reducing the disparities in provincial GDP per capita. The poorer provinces and rural areas can grow faster than the richer ones because they can gain the most from better health and education, they have the highest rates of illiteracy, fertility, and infant, child and maternal mortality.

Suggested Citation

  • Jorge Garcia Garcia & Lana Soelistianingsih, 1998. "Why Do Differences in Provincial Incomes Persist in Indonesia?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 95-120.
    • Handle: RePEc:taf:bindes:v:34:y:1998:i:1:p:95-120
    DOI: 10.1080/00074919812331337290
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    References listed on IDEAS

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    1. Medhi Krongkaew, 1994. "Income Distribution in East Asian Developing Countries: an update," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 8(2), pages 58-73, November.
    2. 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.
    3. Takahiro Akita, 2002. "Income Inequality in Indonesia," Working Papers EMS_2002_02, Research Institute, International University of Japan.
    4. 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.
    5. J.S. Uppal & Budiono Sri Handoko, 1986. "Regional Income Disparities in Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 34, pages 287-304.
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