Spatial Econometric Analysis of Regional Income Convergence Dynamics and Determinants in Indonesia: a Literature Review
Moh. Nur Khaqiqi

Department of Master of Economics Science, Faculty of Economics and Business, Airlangga University
Jl. Airlangga 4-6 Surabaya
info[at]feb.unair.ac.id

Abstract

This study aims to assess the effectiveness of spatial econometric analysis in understanding income convergence and regional economic growth in Indonesia. It employs a systematic literature review method and spatial econometric techniques to analyze regional income convergence. The findings suggest a trend of income convergence, with lower-income regions growing faster than higher-income ones, although the degree of convergence varies. Economic interdependence among regions and spillover effects contribute to this convergence. Key factors influencing income convergence include investment levels, human resource quality, infrastructure, market access, and regional policies. To promote inclusive economic growth, policy strategies should focus on equalizing investment, enhancing human resources, improving infrastructure, and developing local economic sectors across all regions in Indonesia.

Keywords: Spatial econometrics, regional income convergence, regional inequality, & spillover effects.

Topic: Development economics