Abstract
In general, economic growth is defined as a process which leads to the increase of per capita income of a population in a long term. Inter-region disparity in terms of economic development is a common phenomenon in a region’s economic activities. This study aims to determine the effect of economic growth, economic openness, and the degree of fiscal decentralization on development disparities between provinces in Java within 2001-2017. Panel data regression was used together with the Random Effect Model as a data analysis technique. The data used was panel data consisting of time series data from 2001-2017 and cross-sectional data covering Special Capital Region of Jakarta, West Java, East Java, Special Region of Yogyakarta, Central Java, and Banten. The results show that economic growth and fiscal decentralization significantly influence development disparity between provinces in Java while economic openness does not affect the development inequality.
Highlights
The problem of inequality has not yet been resolved, the Indonesian people have long been independent
In Indonesia, the island of Java still dominates the pulse of the Indonesian economy
The island of Java is the pulse of the Indonesian economy, it does not rule out the possibility that inequality will occur between the island of Java itself where inequality will be widened if there is no equal distribution of development
Summary
The problem of inequality has not yet been resolved, the Indonesian people have long been independent. The structure of the Indonesian economy is spatially still facing development gaps or economic disparities both between regions, between islands, and between disadvantaged and developed regions. In Indonesia, the island of Java still dominates the pulse of the Indonesian economy. Economic growth is defined as a process which leads to the increase of per capita income of a population in a long term (Sukirno, 1985) It is common to have economic development inequality between regions. This situation results in regional disparity, as recognized from areas with widely diverse economic quality, from developed to underdeveloped ones, sourced from the different attributes. As proposed by Alisjahbana (2005), Indonesia faces this issue due to Java- and Bali-centric developments
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