Is South Sulawesi a Center of Growth in Eastern Indonesia? Japanese ODA Strategy Revisited

Kazushi Takahashi

Economics and Finance in Indonesia, 2009, vol. 57, 203-218

Abstract: Japanese ODA, especially that undertaken by JICA, has targeted South Sulawesi Province as a core area of development in eastern Indonesia, with hope that the economic growth of South Sulawesi will bring about spillover effects in other regions. This paper tests the validity of the strategy using a framework of Vector Autoregressive model. The results show that South Sulawesi’s economy Granger causes other regions in eastern Indonesia, but not vice versa, implying that South Sulawesi drives the development of other regions in eastern Indonesia. Further analysis shows that the development of the agricultural sector in South Sulawesi potentially has the highest spillover effects than other sectors and that the magnitude of spillover effect from South Sulawesi on eastern Indonesia is higher than other economically important regions, such as Eastern Java and Kalimantan.

Keywords: spillover effect; vector autoregressive; regional disparity; Indonesia (search for similar items in EconPapers)
JEL-codes: O10 R11 R12 (search for similar items in EconPapers)
Date: 2009
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Working Paper: Is South Sulawesi a Center of Growth in Eastern Indonesia?: Japanese ODA Strategy Revisited (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:200910

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