MANUFACTURING ACTIVITIES IN FOUR TOWNS IN CENTRAL JAVA: AN ASSESSMENT OF THEIR DEVELOPMENT POTENTIAL

Abstract

In the literature on industrialization and regional development, two opposing views may be distinguished. In the first view, industrialization acts as a catalyst for regional development by creating large scale and externally oriented industrial complexes. These serve .as growth-poles in mainly traditional, rural economies (Rondinelli & Ruddle, 1978). This view is closely related to the functional and spatial modernization theory. In the second view, developmental effects result from the creation of regionally oriented activities which serve the basic consumer needs of the hinterland population and develop the potentials of their hinterlands by processing raw materials and supplying agricultural inputs and tools (Hardoy & Satterthwaite, 1986). This view is typical of the agropolitan development approach (Friedman & Douglas, 1978). In between these two regional industrialization paradigms, there are a whole range of other possibilities which will not be discussed here. Instead, our purpose is to identify the structural characteristics and development potentials of the manufacturing industries in four small towns in the Serayu Valley Basin in Central Java (Banjarnegara, Wonosobo, PurworejoKlampok and Purbolinggo) (Fig. 1) in the light of current government policy and ongoing processes of regional and industrial development. We will focus on a structural and functional analysis of the various types of activities, as well as on a classification system for assessing their economic viability. The data used in this analysis were collected from surveys and interviews with producers and enterprises between 1983 and 1986. I I The respective enterprise surveys were conducted in Banjarnegara in 19x3, in Wonosobo in 1984, in Purworejo-Klampok in 1985, and in Purbolinggo in 19x6. The samples taken in Banjarnegara. Purworejo-Klampok and Wonosobo were based on a count of the number and types of enterprises present. From this count, a clusTHEORETICAL BACKGROUND Although there is general recognition that even in small towns manufacturing industry can play a vital role in local and rural hinterland development, there stilt seems to be little agreement on the structural characteristics and the viability of various types of activities involved. Moreover, theories and hypotheses relating to their specific roles and dynamics of change are also strongly divergent or even contradictory. Until recently it was assumed that the predominantly traditional and small-scale activities in these centres only have weak linkage and multiplier effects on the regional economy, as well as weak positions vis-a-vis competition from modem large-scale enterprises. Therefore, in the long run, these small-scale activities are condemned to ‘dissolution’. Davila & Satterthwaite (1987) for example have suggested that the relative size of the small-scale, informal sector in small towns is only large because of insufficient demand for formal sector enterprises. This is in contrast with the situation in larger urban centres where informal enterprises survive only because they are supplementing the dominant formal sector. In other words, both the size and the role of the informal sector are expected to diminish in importance when the town becomes more prosperous, for example, as a result of the increasing integration of its hinterland with the national economy.