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Journal : Economics Development Analysis Journal

A Theil Decomposition of Regional Grouping in Indonesia’s Human Development Index Ginanjar, Rah Adi Fahmi; Sutjipto, Hady; Suhendra, Indra; Anwar, Cep Jandi
Economics Development Analysis Journal Vol. 13 No. 3 (2024): Economics Development Analysis Journal
Publisher : Universitas Negeri Semarang

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.15294/edaj.v13i3.13802

Abstract

This research is designed to investigate regional differences in human development in Indonesia based on the Human Development Index (HDI) as a main indicator. With the use of the Theil Index decomposition method, this paper investigates the intra- and inter-regional disparities in Java vs. outside Java and KBI vs. KTI (Western Indonesia-Eastern Indonesia). Furthermore, the study uses convergence models (σ- and β-convergence) to examine the speed at which zones with lower HDI access regions with higher HDI. The dataset employed in the study was data from various competencies at each regency-cities in Indonesia during its period of 2010-2021, which was publicly available at the Indonesian Central Bureau of Statistics (BPS). The findings show a significant decrease in human development disparities over time, although the convergence process remains slow. Intra-regional inequality contributes more significantly to the overall disparity than inter-regional inequality, particularly within the KBI-KTI dichotomy. This study suggests that while Indonesia is on a path toward reducing regional disparities, more targeted policy interventions are needed to accelerate the convergence process, particularly in underdeveloped regions like Eastern Indonesia.