REGIONAL DEVELOPMENT AND INCOME DISPARITIES IN INDONESIA*

Abstract

Indonesia has shown an interesting spatial profile in population and economic activity. One of the most astonishing facts is that Jawa island constituting merely 6.9% of the total land area, accommodates 62% of the total population while accounting for about 50% of the gross national domestic product (GNDP) in 1980. This implies, with the total current population of 163 million and the total current GNDP of 96 trillion Rp., that the vast majority of the land area is still underdeveloped. It is not very surprising therefore that the government has adopted the removal of regional disparity in population and economic activities as its major national policy objective. The cultural and ethnic diversity, however, poses tremendous challenges for regional development. Indonesia comprises a mixture of races and people, which could be classified into around 300 different ethnic groups. While approximately 90 percent of the Indonesian people are Moslems, the remaining 10 percent are Christians, Catholics, Hindus, and Buddhists. Upon its independence on August 17, 1945, after more than 350 years of colonial occupation by the Dutch government, the Republic of Indonesia thus adopted “Unity through diversity” as its political slogan. The purpose of this paper is to provide an overview of recent regional economic development and income disparities in Indonesia. The next two sections provide a review of regional