Does the Crisis Change the Nature of Agglomeration Economies in Indonesia?

Abstract

By examining their source and magnitude, this paper looked at the changes in the nature of Indonesia’s agglomeration economies over three distinct, successive periods: the pre-crisis boom (1990–1996), the deep crisis (1997–2000), and the post-crisis recovery (2001-2010). We found that economies of localisation and urbanisation are both present during the observation periods, with the former generating a stronger effect than the latter. Furthermore, types of agglomeration externalities have significant relationship with variations in size of plants and industrial sectors. These factors shed some light on the nature of agglomeration economies and how the agglomeration sources changed across the crisis periods in favour of localisation economies. The results also demonstrate the industry life cycle at work, as evidenced by changing industry structure during the recovery period.

Strategic Interaction Between the Agglomeration of High-Rise Buildings and the Economy of DKI Jakarta

“…Nonetheless, the analysis in this study validates Jakarta's experience in effective density. This analysis implies that the distribution of high-rise buildings and employment density in each area examined have been relatively effective, which can induce optimal productivity and contribute to agglomeration benefits [14,15]. The right amount of density in a particularly strategic location provides opportunities for companies and workers to benefit from higher productivity, such as a bigger labor market, deeper product market, and knowledge spillover.…”

“…The proximity of high-rise buildings representing the urban density to the existing service providers implies the high possibility of cost reduction for transport. Therefore, the agglomeration of high-rise buildings in a particular area may reduce transport budgets for producers and consumers because of their closeness [9,14,15]. In other words, economic fundamentals or profit-based motivations cause the agglomeration of highrise buildings in a particular area following the city and industrial life cycle [14,15].…”