Spatial Redistributions of Regional Economic Activity in Central Java (Direct Error Correction Model Causality Approach)

Abstract

This study analyzes spatial inequality through a causal relationship between inequality and economic growth within-recidency, between-recidency and overall in Central Java.The analytical tool used is the Direct Error Correction Model causality. This study shows that spatial concentrations throughout the observation period are quite high. In the 2001-2008 period there was an increasing tendency for spatialconcentration, reflecting the decline in the distribution of the Gross Regional Domestic Product (GRDP) share of districts and cities in Central Java. We also obtained similar findings in a number of regions both within and between-recidency. Post-2008, spatial concentration tends to decrease, indicating the distribution of the Gross Regional Domestic Product share. Other findings indicate a one-way relationship shown economic growth towards inequality. Another important contribution is that economic growth in inequality only occurs in the long term. Thus there has been convergence because of the increase ineconomic growth which is able to reduce inequality in all areas of Central Java, including within and between-recidency. This proves that during the implementation of regional autonomy there is a spread effect greater than the backwash effect in Central Java, including within and between-recidency.

Joint Determinants of Monetary, Macroeconomic, Social and Income Inequality

“…This means that economic growth in Indonesia cannot achieve benefits for all people so that it can increase income inequality, this is in accordance with what was found by Rubin and Segal (2015). Therefore, to equitable distribute the benefits of economic growth should be promoted more equitable tax and transfer systems, and implementation of labour market reforms aimed at reducing earning gaps and unemployment or the reduction of constraints to the access of credit markets (Panjawa and Samudro 2020).…”

Medium Small Micro Enterprise (MSME) Development and Economic Growth: Causality Analysis

“…The research questions in this study will be answered using the causality method and identification of the significance of the model in the short and long term to prove the existence of the supply-leading hypothesis using the modified Error Correction Model (ECM) method. The Modified Error Correction Model (ECM) used in this study adopted from Panjawa & Samudro (2020), namely the Direct Error Correction Model for causality.…”