Indonesia's changing economic geography

Abstract

Indonesia's regional socio-economic data base extends over 30 years, so it is now possible to draw conclusions about regional development dynamics since the 1970s. We examine economic growth, inequality, convergence, structural change, demographic dynamics and social indicators over this period. There continues to be great diversity in economic and social outcomes, but growth and social progress have been remarkably even: the poorest regions, located mainly in Eastern Indonesia, have generally performed about as well as the national average. The better performing regions include those that are the most 'connected' to the global economy. In this respect, Jakarta stands out, growing richer than the rest of the country over time. As expected, conflict is harmful to economic development. There is no clear natural resource story: the performance of the resource-rich provinces has varied considerably.