Revealing the Dual Dynamics: Transient and Persistent Efficiencies of the Indonesian Provincial Economies

Mohammad Yasin and Fichrie Fachrowi Adli
Additional contact information
Fichrie Fachrowi Adli: Department of Economics, Universitas Airlangga, East Java, Indonesia

Economics and Finance in Indonesia, 2024, vol. 70, 113-131

Abstract: We examine the decomposition of technical efficiency components into transient and persistent horizons applied to the 33 provincial economies in Indonesia. Focusing on the post-decentralization era in 2002–2022, we employ Stochastic Frontier Analysis to gauge efficiency dynamics for time-variant and time-invariant evolution. We reveal that the persistent inefficiencies outweigh transient ones, implying the persistent inefficient behavior of Indonesian provinces. We also capture that East Nusa Tenggara and several provinces in Eastern Indonesia show the most lagged-behind in terms of persistent inefficiency severity, suggesting necessity of structural changes through more strategic and specific development models beyond mere heterogeneous input reallocation.

Keywords: persistent inefficiency; transient inefficiency; Indonesian provinces; regional development (search for similar items in EconPapers)
JEL-codes: C33 D24 O11 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://lpem.org/repec/lpe/efijnl/202408.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:202408

Access Statistics for this article

More articles in Economics and Finance in Indonesia from Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Halley Yudhistira ( this e-mail address is bad, please contact ).