Infrastructure Improvement and Its Impact on Indonesian Economic Performance
Djoni Hartono (),
Tony Irawan () and
Ferry Irawan ()
Additional contact information Tony Irawan: Department of Economics,Faculty of Economics and Management, Bogor Agricultural University IPB
Ferry Irawan: Fiscal Policy Office - Ministry of Finance
Indonesian government shows big commitment on the improvement of infrastructure which is reflected in some regulations and policies. It is supported by many empirical evidences that show the importance of infrastructure improvement on economic performance. In this paper, we develop a CGE model to analyze the impact of infrastructure on Indonesian economy by introducing several types of infrastructure and also discuss the impact of infrastructure on the poverty level. The results suggest that improvement on any types of infrastructure is expected will increase economic growth, raise government revenue, raise factor’s income and reduce the poverty level. Improvement on public work of agriculture, land transportation and telecommunication are still preferable option relative to others. Interestingly, even though public work of agriculture usually is located in rural areas, but the model suggest that public work of agriculture improvement will result higher impact on urban household relative to rural household.