Econometric Spatial Modeling to Analyze Interregional Development Inequality in Indonesia

Abstract

This study aims to analyze the development inequality between regions in
Indonesia using a qualitative approach and econometric spatial modeling.
Development inequality between the western and eastern regions of
Indonesia, particularly in Java, Sumatra, and Papua, remains a significant
issue that hinders equitable development. Based on interviews with local
government officials, economic institutions, and communities, as well as data
analysis from questionnaires and field observations, it was found that limited
infrastructure, centralized development policies, and dependence on the
natural resources sector are the primary factors contributing to inequality.
Additionally, uneven investment allocation exacerbates regional inequality.
The study also applied econometric spatial modeling to identify patterns of
inequality and the impact of inter-regional interactions, suggesting that
inequality in one region can affect inequality in another. These findings
suggest that development policies should be more decentralized and tailored
to local needs to achieve more effective and equitable development. The
results of this study provide policymakers with recommendations for
designing a more inclusive and equitable development strategy throughout
Indonesia.