Analysis of Provincial Convergence in Indonesia in 2001-2017

Abstract

This study aims to analyze whether regional/provincial convergence occurred in Indonesia during the 2001-2017 period and how social indicators (HDI), spatial indicators (density) and economic indicators (foreign investment and economic openness) affect the level of convergence between regions in Indonesia during period 2001-2017. Research data is secondary data from the Central Statistics Agency. The calculation of sigma convergence uses the standard deviation of the PDRB log per capita between provinces, while the calculation of beta convergence uses panel data regression analysis with an approach fixed-effect model. The results showed that sigma convergence and beta convergence between provinces in Indonesia in 2001-2017. Based on the estimation results it is known that all foreign investment (PMA), HDI, density, and export variables have significant and significant effects on the growthofthe economy.Variable density is a spatial indicator, measured by area divided by population, has a negative and significant effect on economic growth.