Analysing regional development in Indonesia based on GDP and cement consumption from 2010 to 2020

Abstract

This article analyses regional development in Indonesia from 2010-2020, based on its cement consumption. It investigates the relationship between cement demand, GDP, population, and urbanization by using Ordinary Least Square regression. In this period, Java known as the central cement producer and intake most of the product from the market. However, cement consumption per capita (CCP) in Kalimantan was the highest during 2010-2015 and in Sulawesi during 2016-2020. Meanwhile, high distribution cost has caused Eastern Indonesia consumed cement the least. The regression analysis shows that nationally and in four regions, variables GDP and population have positively influence while urbanization has negative influence on the cement demand. This relationship, however, do not exist in Sulawesi and Maluku-Papua. Negative coefficient values of urbanization indicate that road transport infrastructures and public facilities has played a more important role in urban cement consumption rather than public housing. Secondly, we found that GDP per capita (GDPP) positively affect the CCP, unless in Kalimantan region. An increase of 1% GDPP will cause national CCP to raise by 0.005%, regional CCP in Java and Sumatra by 0.005% as well, but in Sulawesi, Bali-Nusa Tenggara, and Maluku-Papua, CCP will raise by 0.01%. The extreme CCP gap portrayed the disproportionate in regional development in the country. Although massive infrastructure projects have lessened the gap, it is necessary to have an adequate supply of the product in each region with affordable price to accelerate regional development.