An Analysis of the Effects of Spatial Dependence on Economic Growth Among Regencies and Cities in Java

Ma'rufa Khotiawan(1*), Rachmad Kresna Sakti(2), Setyo Tri Wahyudi(3)

(1) Department of Economics, Faculty of Economics and Business, Universitas Brawijaya
(2) Department of Economics, Faculty of Economics and Business, Universitas Brawijaya
(3) Department of Economics, Faculty of Economics and Business, Universitas Brawijaya
(*) Corresponding Author

Abstract

Java is inarguably essential for Indonesia’s economy with its 59% contribution to the country’s GDP. However, behind the tremendous participation lies high regional disparity, poverty, and unemployment, which have become challenges to its economic development. This research aims to analyze the role of spatial dependence on regional economic growth in 119 regencies and cities in Java during the 2015- 2019 period. Exploratory Spatial Data Analysis (ESDA) and Spatial Durbin Model (SDM) were used to analyze the determinants of the spatial dependence and its impact on regional economic growth. The travel time among regions was utilized for the spatial weight matrix. The existence of spatial dependence in inter-regional economic growth can be identified from all models. The positive value of Moran’s I in the ESDA analysis indicates that the spatial pattern of the growth is clustering. The lambda parameter in the SDM estimation indicates the occurrence of backwash spillover in the effect of the spatial dependence on economic growth. The direct effects of initial per capita income, physical capital investment, road infrastructure, population growth, and education are significant on economic growth. Furthermore, the spillover effect of initial per capita income and education is also significant on the inter-regional economic growth.

Keywords

Economic growth, spatial dependence, spillover effect, Exploratory Spatial Data Analysis (ESDA), Spatial Durbin Model (SDM)

Full Text:

PDF HTML

References

Álvarez, I., & Barbero, J. (2016). The public sector and convergence with spatial interdependence: empirical evidence from Spain. Applied Economics, 48, 2238–2252. https://doi.org/10.1080/00036846.2015.1117048

Anselin, L. (1988). Spatial Econometrics: Methods and Models. 4. https://doi.org/10.1007/978-94-015-7799-1

Anselin, L. (1995). Local Indicators of Spatial Association—LISA. Geographical Analysis, 27(2), 93–115. https://doi.org/10.1111/j.1538-4632.1995.tb00338.x

Anselin, L., & Getis, A. (2010). Spatial statistical analysis and geographic information systems. Advances in Spatial Science, 61, 35–47. https://doi.org/10.1007/978-3-642-01976-0_3

Arbia, G., Basile, R., & Piras, G. (2005). Using Spatial Panel Data in Modelling Regional Growth and Convergence (ISAE Working Papers, Issue 55). ISTAT - Italian National Institute of Statistics - (Rome, ITALY). https://econpapers.repec.org/RePEc:isa:wpaper:55

Arbués, P., Mayor, M., & Baños-Pino, J. (2014). Productivity and accessibility of road transportation infrastructure in Spain: A spatial econometric approach (pp. 177–194). https://doi.org/10.4337/9781782540731.00017

Ardiyono, S., Parenrengi, N. P. A., & Faturachman, F. (2018). How does toll road impact accessibilities, trades, and investments in short term? A case study of Cipali toll road in West Java, Indonesia. Journal of Infrastructure, Policy and Development, 2. https://doi.org/10.24294/jipd.v2i2.673

Aritenang, A. F. (2014). The spatial effect of fiscal decentralisation on regional disparities: the case from Indonesia. Indonesian Journal of Geography, 46(1), 1–11. https://doi.org/10.22146/IJG.4985

Asian Development Bank. (2012). Infrastructure for supporting inclusive growth and poverty reduction in Asia. 87. http://hdl.handle.net/11540/104

Aspiansyah, A., & Damayanti, A. (2019). Model Pertumbuhan Ekonomi Indonesia: Peranan Ketergantungan Spasial. Jurnal Ekonomi Dan Pembangunan Indonesia, 19(1), 62–83. https://doi.org/10.21002/JEPI.V19I1.810

Statistics Indonesia. (n.d.). Retrieved October 13, 2021, from https://www.bps.go.id/subject/52/produk-domestik-regional-bruto--lapangan-usaha-.html#subjekViewTab2

Statistics Indonesia. (2021a). Berita Resmi Statistik Hasil Sensus Penduduk 2020.

Statistics Indonesia. (2021b). Kemiskinan dan Ketimpangan. https://www.bps.go.id/subject/23/kemiskinan-dan-ketimpangan.html

Banerjee, A., Duflo, E., & Qian, N. (2020). On the road: Access to transportation infrastructure and economic growth in China. Journal of Development Economics, 145, 102442. https://doi.org/https://doi.org/10.1016/j.jdeveco.2020.102442

Barro, R. J., & Sala-I-Martin, X. (1992). Convergence. Journal of Political Economy, 223–251. https://doi.org/10.1086/261816

Capello, R. (2009). Spatial Spillovers and Regional Growth: A Cognitive Approach. Http://Dx.Doi.Org/10.1080/09654310902778045, 17(5), 639–658. https://doi.org/10.1080/09654310902778045

Case, A. C., Rosen, H. S., & Hines, J. R. (1993). Budget spillovers and fiscal policy interdependence: Evidence from the states. Journal of Public Economics, 52(3), 285–307. https://doi.org/https://doi.org/10.1016/0047-2727(93)90036-S

Chen, S., & He, X. (2014). Road to success? The effects of road toll on economic growth in China. Https://Doi.Org/10.1080/13504851.2014.931913, 22(2), 158–162. https://doi.org/10.1080/13504851.2014.931913

Cheshire, P., & Malecki, E. (2003). Growth, Development, and Innovation: A Look Backward and Forward. Review of Economic Design, 83, 249–267. https://doi.org/10.1007/s10110-003-0185-8

Cobb, C. W., & Douglas, P. H. (1928). A Theory of Production. The American Economic Review, 18(1), 139–165. http://www.jstor.org/stable/1811556

Day, J., & Lewis, B. (2013). Beyond univariate measurement of spatial autocorrelation: disaggregated spillover effects for Indonesia. Annals of GIS, 19(3), 169–185.

Dubin, R. (2012). Spatial Weights. The SAGE Handbook of Spatial Analysis, 125–157. https://doi.org/10.4135/9780857020130.N8

Dwiputri, I. N., Seprillina, L., & Yusida, E. (2022). The Effect of the Operational Exit Tolls on the Welfare of the Local Community. Signifikan: Jurnal Ilmu Ekonomi, 11(1), 73–82. https://doi.org/10.15408/SJIE.V11I1.22108

Elhorst, J. (2014). Spatial Econometrics: From Cross-Sectional Data to Spatial Panels. https://doi.org/10.1007/978-3-642-40340-8

Endah Ervina, M., & Jaya, M. (2018). Analyzing Factors Affecting GRDP in Indonesia Using Spatial Panel Data Model. Modern Applied Science, 13, 148. https://doi.org/10.5539/mas.v13n1p148

Ertur, C., & Koch, W. (2007). Growth, technological interdependence and spatial externalities: theory and evidence. Journal of Applied Econometrics, 22(6), 1033–1062. https://doi.org/https://doi.org/10.1002/jae.963

Firman, T. (2017). The urbanisation of Java, 2000–2010: towards ‘the island of mega-urban regions.’ Asian Population Studies, 13(1), 50–66. https://doi.org/10.1080/17441730.2016.1247587

Fischer, M. M. (2011). A spatial Mankiw-Romer-Weil model: Theory and evidence. Annals of Regional Science, 47(2), 419–436. https://doi.org/10.1007/S00168-010-0384-6

Hardjoko, A., Santoso, D., & Sakti, R. (2021). The Effect of Industrial Agglomeration on Economic Growth in East Java, Indonesia. Journal of Asian Finance Economics and Business, 8, 249–257. https://doi.org/10.13106/jafeb.2021.vol8.no10.0249

Harris, R. (2011). Models of Regional Growth: ast, prPesent and Future. Journal of Economic Surveys, 25(5), 913–951. https://doi.org/https://doi.org/10.1111/j.1467-6419.2010.00630.x

Haughton, J., & Khandker, S. (2009). Handbook on Poverty and Inequality.

Hidayat, A., Prasetya, F., & Pangestuty, F. W. (2021). Role of Internet Accessibility in Reducing the Poverty rates in Java; a Spatial Approach. Journal of Indonesian Applied Economics, 9(1), 21–31. https://doi.org/10.21776/UB.JIAE.2021.009.01.3

Kuncoro, M. (2002). Analisis spasial dan regional: studi aglomerasi & kluster industri Indonesia. Unit Penerbit dan Percetakan AMP YKPN.

Laksono, H., Rustiadi, E., & Siregar, H. (2018). Spillover Spasial Negatif Pertumbuhan Ekonomi Antar Kabupaten/Kota Di Provinsi Jawa Timur. Tata Loka, 20(3), 266–277.

Lesage, J. P., & Fischer, M. M. (2008). Spatial Growth Regressions: Model Specification, Estimation and Interpretation. Spatial Economic Analysis, 3(3), 275–304. https://doi.org/10.1080/17421770802353758

LeSage, J., & Pace, R. K. (2009). Introduction to spatial econometrics. Chapman and Hall/CRC.

Mankiw Gregory, N., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437. https://doi.org/10.2307/2118477

Mankiw, N. G. (2010). Macroeconomics, 7th Edition. Worth Publishers. http://www.worthpublishers.com/mankiw

Miranti, R. C., & Mendez, C. (2022). Social and Economic Convergence across Districts in Indonesia: A Spatial Econometric Approach. Bulletin of Indonesian Economic Studies, 1–31. https://doi.org/10.1080/00074918.2022.2071415

Mustajab, M. (2009). Infrastructure investment in Indonesia : process and impact / Mohammad Mustajab. Rijksuniversiteit.

Nijkamp, P., & Poot, J. (1998). original: Spatial perspectives on new theories of economic growth. The Annals of Regional Science, 32(1), 7–37. https://econpapers.repec.org/RePEc:spr:anresc:v:32:y:1998:i:1:p:7-37

Nurjanna, Ladjind, Agus, Sumana, Rachmad, & Kresnac. (2020). The Impact of Total Factor Productivity and Spatial Dependence on Per Capita Income Convergence.

Panzera, D., & Postiglione, P. (2022). The impact of regional inequality on economic growth: a spatial econometric approach. Regional Studies, 56(5), 687–702. https://doi.org/10.1080/00343404.2021.1910228

Pasaribu, E., Priyarsono, D., Siregar, H., Rustiadi, E., & Belakang, A. (2014). Dampak Spillover Pusat Pertumbuhan di Kalimantan. Vol 5, 225–238. https://doi.org/10.22212/jekp.v5i2.90

Pravitasari, A. E., Rustiadi, E., Priatama, R. A., Murtadho, A., Kurnia, A. A., Mulya, S. P., Saizen, I., Widodo, C. E., & Wulandari, S. (2021). Spatiotemporal Distribution Patterns and Local Driving Factors of Regional Development in Java. In ISPRS International Journal of Geo-Information (Vol. 10, Issue 12). https://doi.org/10.3390/ijgi10120812

Rahadini, A. (2018). Regional Disparities in Central Java. An Empirical Study [Institut für Regionalwissenschaft (IfR)]. https://doi.org/DOI: 10.5445/IR/1000078692

Rummaya, Wardaya, W., & Landiyanto, E. (2005). Club Convergence & Regional Spillovers In East Java. EconWPA, GE, Growth, Math Methods.

Rustiadi, E., Panuju, D. R., & Pravitasari, A. E. (2010). Java Island: Regional Disparity and Sustainabillty Perspectives (pp. 94–114). https://agris.fao.org/agris-search/search.do?recordID=ID2021109133

Rustiadi, E., Saefulhakim, S., & Panuju, D. R. (2009). Perencanaan dan pengembangan wilayah. Crestpent Press dan Yayasan Obor Indonesia. https://books.google.com/books/about/Perencanaan_dan_Pengembangan_Wilayah.html?hl=id&id=vW6rDAAAQBAJ

Sakti, R. K. (2005). Analisis spasial industri besar menengah Jawa Timur:: Studi kasus koridor Utara Selatan tahun 1990-2001. Universitas Gadjah Mada.

Santos-Marquez, F., Gunawan, A., & Mendez, C. (2022). Regional income disparities, distributional convergence, and spatial effects: evidence from Indonesian regions 2010–2017. GeoJournal, 87. https://doi.org/10.1007/s10708-021-10377-7

Sapena, M., & Ruiz, L. Á. (2019). Analysis of land use/land cover spatio-temporal metrics and population dynamics for urban growth characterization. Computers, Environment and Urban Systems, 73, 27–39. https://doi.org/https://doi.org/10.1016/j.compenvurbsys.2018.08.001

Simon, J. L. (1990). Population matters: People, resources, environment, and immigration. Transaction Publishers.

Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513

Sun, X., Chen, F., & Hewings, G. J. D. (2017). Spatial Perspective on Regional Growth in China: Evidence from an Extended Neoclassic Growth Model. Emerging Markets Finance and Trade, 53(9), 2063–2081. https://doi.org/10.1080/1540496X.2016.1275554

Supartoyo, Y. H., Tatuh, J., & Sendouw, R. H. E. (2013). The Economic Growth and the Regional Characteristics : The Case of Indonesia. Bulletin of Monetary Economics and Banking, 16(1), 1–16. https://doi.org/10.21098/BEMP.V16I1.435

Takeda, T. K.-H. C. (Pembimbing/Promotor); (2013). Structural changes and regional income disparity in Indonesia : 1990 -2010.

Vidyattama, Y. (2014). Issues in Applying Spatial Autocorrelation on Indonesia’s Provincial ncome grGowth Analysis. The Australasian Journal of Regional Studies, 20, 375–402.

Wang, J. (2017). Economic Geography: Spatial Interaction. https://doi.org/10.1002/9781118786352.wbieg0641

Wang, Y., Liang, Z., & Chen, H. (2021). Research on the Spatial Spillover Effect of Ecological Innovation Ability and Regional Economic Growth. IOP Conference Series: Earth and Environmental Science, 769(2), 22008. https://doi.org/10.1088/1755-1315/769/2/022008

Wibisono, P., & Kuncoro, M. (2015). Efek Limpahan Pertumbuhan Antar-Kabupaten/Kota di Provinsi Jawa Timur Tahun 2001–2013. Jurnal Ekonomi Dan Pembangunan Indonesia, 16(1), 31–46. https://doi.org/10.21002/JEPI.V16I1.584

Williamson, J. G. (1965). Regional Inequality and the Process of National Development: A Description of the Patterns. Economic Development and Cultural Change, 13(4), 1–84. http://www.jstor.org/stable/1152097

Zeng, S., Shu, X., & Ye, W. (2022). Total Factor Productivity and High-Quality Economic Development: A Theoretical and Empirical Analysis of the Yangtze River Economic Belt, China. International Journal of Environmental Research and Public Health, 19(5). https://doi.org/10.3390/ijerph19052783

Article Metrics

Abstract view(s): 1077 time(s)
PDF: 472 time(s) HTML: 17 time(s)

Refbacks