Trends and Determinants of The Geographical Distribution of Economic Activities: Evidence from Indonesian Manufacturing

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Abstract

This study analyzes the trends and determinant factors of vis- -vis spatial distribution in Indonesian manufacturing during the period of 1990-2010. There is a long-term increasing trend of regional specialization driven by core regions in Java Island and by affluent regions outside of Java Island. Among resource-based and labor-intensive industries, there is a smooth declining trend of geographical concentration. An increasing trend in regional specialization and geographical concentration during the economic crisis is identified turns into a decreasing trend at the onset of setting up a decentralization policy and then pushed upward again. Finally, by applying spatially weighted Ellison-Glaeser (EG) Index, it is found that labor skills, export activities, and wage rates strongly determine the degree of agglomeration among Indonesian manufacturing industries.
Original languageEnglish
Pages (from-to)18-47
JournalJournal of Indonesia Applied Economics
Volume7
Issue number1
DOIs
Publication statusPublished - 3 Jul 2014

Keywords

  • Agglomeration, Decentralization, Regional specialization, Geographical concentration, Global economy

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