SPATIAL INEQUALITY ANALYSIS WITHIN A REGIONAL GROWTH DECOMPOSITION TECHNIQUE INDONESIAN CASE 1976-1998 by Suahasil Nazara

This paper introduces another perspective to analyze spatial inequality, in particular within the regional growth decomposition framework. The employed method brings about the spatial growth differencing as a measure of spatial inequality, an alternative to the regional conditioning principle (Quah, 1996). Results for the 1976-1998 case suggests that there is a tendency toward more spatial equality within Indonesian five super regions since the end of the 1980s. Thereafter, a Markov probability matrix is estimated, based on the regional differencing data. An interesting result here is that the current situation is not too far apart from the theoretical ergodic distribution. Although there is a relatively great degree of mobility, both in achieving equilibrium as well as at the steady state condition, only about half of the provinces will end up at within + 3% difference with their neighbors’ economic growth rate.