Analysis of Inter-Regional Economic Development Inequality in Indonesia: Williamson Index Approach and Determinant Factors
Keywords:
Regional Inequality, Williamson Index, Economic Development, Urbanization, Panel DataAbstract
Purpose: This study aims to analyze the inequality of economic development between regions in Indonesia during the period 2013–2023 using the Williamson Index approach. Furthermore, this study also aims to identify and evaluate factors influencing the level of development inequality, such as regional investment, government spending, infrastructure, urbanization, and the Human Development Index (HDI).
Subjects and Methods: This study uses panel data from 34 provinces in Indonesia over an 11-year period (2013–2023). The Williamson Index is used to measure development inequality, while panel data regression analysis with a fixed-effects model approach is applied to examine the influence of independent variables on inequality. The variables studied include regional investment, regional government spending, road length (as a proxy for infrastructure), urbanization rate, and the Human Development Index (HDI).
Results: The results of the study indicate that, in general, inter-regional development inequality is moderate, although it shows a downward trend from year to year. The variables of regional investment, regional spending, road length, and the Human Development Index (HDI) have a negative and significant effect on inequality, indicating that improvements in these variables can reduce inter-regional disparities. Meanwhile, the level of urbanization has a positive and significant effect on inequality, indicating that concentrated urbanization widens the gap between regions.
Conclusions: Inter-regional development inequality in Indonesia remains a serious challenge, despite improvements. Economic and human development factors have been shown to reduce inequality when managed appropriately. However, unbalanced urbanization actually exacerbates disparities. Therefore, comprehensive and integrated policies are needed to promote more equitable and sustainable development across Indonesia.
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