Cyclical shocks and spatial association of Indonesia's district‐level per capita income

Mitsuhiko Kataoka

Asian Economic Journal, 2022, vol. 36, issue 3, 261-287

Abstract: Our exploratory spatial data analysis covered Indonesia's district‐level per capita incomes for 2004–2018 and found statistical evidence of a weak but monotonically increasing positive spatial association. The spatial income clusters/outliers were scattered nationwide and expanded geographically. Applying the filtering method, we found that regional cyclical shocks significantly influenced spatial association, largely in resource‐rich districts, and identified the locations of persistent spatial association that were immune to shocks. We also specified new development targets, showing the adjacent coexistence of low‐income agrarian clusters with high‐income mining clusters in the undeveloped Papuan provinces. The overall national average is moving toward the narrowing of inter‐district income disparities. However, nearly half of all districts have widened the income disparities with their neighbors; shocks increased income gaps rather than narrowing them.

Date: 2022
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