Abstract
Infrastructure is one of the inputs that could affect the growth of a region. The difference in infrastructure development between regions is an obstacle for Indonesia in the rise of economic growth, which will be directly proportional to the increase of inequality between regions. In this study, infrastructure is divided into 2: hard infrastructures, where there are electrification variables, access to water and road access, and soft infrastructure, explained through variables of life expectancy, literacy rates, and school enrolment rates. This study is conducted using the Ordinary Least Square analysis techniques to explain the growth-inequality between regions using the Williamson Index. Principal Component Analysis (PCA) is applied in this study to define hard infrastructure variables and soft infrastructure. The results of this study show that the development of hard infrastructure and soft infrastructure in various regions in Indonesia has reduced the number of inequality in various regions in Indonesia.
Highlights
Economic growth is one of the indicators used to measure the economic performance of a country
Based on the background and formulation of the problem described earlier, this study aims to determine the effect of infrastructure development carried out by the Government of Indonesia on economic growth inequality between regions in Indonesia as well as which hard infrastructure or soft infrastructure development contributes to the increase and decrease in inequality happened in Indonesia
Through the results of this study, it can be seen that inequality between western Indonesia and eastern Indonesia continues to decline
Summary
Economic growth is one of the indicators used to measure the economic performance of a country. A country with low economic growth will face difficulties in increasing the society standard of living. Aside from being one indicator of economic performance, economic growth is a measure of the level of welfare of a country. The occurring economic growth of a country is not always followed by the creation of justice and equal distribution of people’s welfare, especially in a developing country (Acquah & Ibrahim, 2020; Guru & Yadav, 2019). Simon Kuznets argues that by using Kuznets Curve Hypothesis, reveals that economic growth in the early stages of a country will increase. J. et al / International Journal of Business and Administrative Studies 6(2) 2020 inequality or income inequality and in the following period income inequality will decrease in line with increasing economic growth
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