The disparity on per capita income is evident between Java and outside Java in Indonesia. This paper confirms this evidence using σ-convergence statistic. Furthermore, this paper identify the determinant of per capita income by adopting the Solow growth model and β-convergence model. The result emphasize confirms the availability of basic infrastructure including electricity, road and sea transport are a necessary condition to gain high and sustainable growth. In addition, the result shows the existence of β-convergence, which represents the pace of regions with lower per capita income catching up other regions with higher per capita income, in Indonesia with 1,75% speed of convergence; or equivalent with half-life of 41.14 years. Furthermore, the openness will increase the region’s productivity due to higher technology spillover. Keywords: σ-convergence, β-convergence, Solow growth model, income distribution, Gini coefficient,disparity.JEL Classification: O47, O11, O18, R11

This paper attempts to explain the differences in Central Bank Digital Currency (CBDC) adoption across emerging and advanced countries using an ordered probit model. Based on a cross-country dataset, we show that wholesale CBDC is more advanced in countries with developed financial markets and greater cross-border transactions. Retail CBDC is more advanced in countries with lower financial inclusion and a large informal economy. We further show that different factors affect retail CBDC adoption across emerging and advanced countries. However, cross-border transactions are the most crucial factor influencing wholesale CBDC adoption across emerging and advanced countries.

This paper analyzes the presence of the threshold of the real rupiah exchange rate which influences the profitability of manufacturing industry in Indonesia. By using a non-dynamics panel data over medium and large scale companies during 2001-2009, we found the threshold of 82.4 for the real rupiah exchange rate (REER). The REER index ranging from 82.24 to 101.13 with the change value between -5.01% and 20.09% (yoy) is secure for the profitability of Indonesian manufacturing industry. This paper also conform the significant affect of Total Factor Productivity on firm’s profitability. Keywords: Profitability, Manufacturing industry, exchange rateJEL classification: F1, D21, L6

This paper analyzes the presence of the threshold of the real rupiah exchange rate which influences the profitability of manufacturing industry in Indonesia. By using a non-dynamics panel data over medium and large scale companies during 2001-2009, we found the threshold of 82.4 for the real rupiah exchange rate (REER). The REER index ranging from 82.24 to 101.13 with the change value between -5.01% and 20.09% (yoy) is secure for the profitability of Indonesian manufacturing industry. This paper also conform the significant affect of Total Factor Productivity on firm’s profitability.  Keywords: Profitability, Manufacturing industry, exchange rate JEL classification: F1, D21, L6

Manufacturing sector with comparative advantage, product diversification, and integration to global supply chain network will support sustainability of domestic economy. Manufacturing sector is the fourth largest in labor absorption as it constitutes 26.8% of total GDP (average 2005-2010). Nevertheless, its growth deteriorates, from 9.2% yoy (1991-1996) to 4.0% yoy (2005-2010). The decrease indicates some problems in labor productivity and competitiveness of domestic firms in manufacturing sector, which are lack of productivity and technological progress in manufacturing sector respectively. Both aspects are mainly determined by presence of high-skilled labor and R&D activity. Based on the background, this study is to reveal the innovation capacity and potential development in manufacturing sector based on Large and Medium Enterprise Statistic survey of Statistics Indonesia (BPS). To obtain weights of determinant factors of innovation capacity and potential, we used Analytic Network Process (ANP) method to gauge innovation level of each firm in manufacturing sector. This study found that most of Indonesian manufacturing firms have a low R&D activity. About 74% (16.851 firms) categorized as low innovation, whilst 5% (1.152 firms) considered as high innovation. These facts themselves reflect the capability of firms to compete in the global market through exports. Of low level firms, merely 15% (2.516 of 16.851 firms) is involved in export activity. On the contrary, 49% (561 of 1.152 firms) of high innovation level is involved in export activity, mainly in food, chemical, furniture, and textile sectors. By spatial, highly innovative firms which doing exports mainly located in Java. It is possibly due to a high quality of infrastructure and human capital support which is relatively better in Java than any other parts in Indonesia.