Economics Development Analysis Journal 7 (2) (2018)

Economics Development Analysis Journal

http://journal.unnes.ac.id/sju/index.php/edaj

Analysis of Development Inequality in Kedungsepur Area

Khoir Akfini Didia1

Economics Development Department, Economics Faculty, Universitas Negeri Semarang Article Info Abstract ______

Artikcle History The development’s problem faced in Indonesia time by time is inequality as a result from failure of Received December 2017 the centralistic system which affected the widening of the gap between rich and poor, urban biased Accepted February 2018 development, imbalance between economic sectors and regional inequality. This study aims to Published May 2018 analyze what factors are affect on development inequality in Kedungsepur area and to know did ______convergence happen in Kedungsepur area. This study uses secondary data from the Central Statistics Keywords: Agency of Central Java Province and Regional Investment Agency of Central Java Province from Investmen, HDI, Labor 2008 to 2013. The variables of this study are investment, human development index, labor force Force Particiption Rate, participation rate, and population. In this study, we used quantitative study methods by using Population, Inequality, multiple linear regression analysis with Ordinary Least Square method (OLS). The results of this Convergence study note that investment did not affect significantly on inequality of Kedungsepur area, HDI affects ______significantly on inequality of Kedungsepur area, labor force participation rate did not affect significantly on inequality of Kedungsepur area, and population affects significantly on inequality of Kedungsepur area and then there is convergence process in Kedungsepur area.

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INTRODUCING Development Area also including growth area and potential border which have varying growth Poor region or country income would acceleration thus can be developed effectively grow faster than rich region or country income (Kuncoro, 2004). therefore on further would reached convergence At the beginning of development all of income level between region or country regions have same income per capita pattern, in concerned, in other words the income in all other words, its development pattern tends to region or country finally would be on the same keep rose up, nevertheless after years carry on level. Pritchett (1996, 1997) stated that what turns out inequality still happened across region happened in world economic growth history due to each difference on creating economic virtually is massive divergence between rich and growth. Over those some areas, Kedungsepur is poor country. Fast economic growth ain’t result the area that has highest level of inequality. Even over poor position but that is the result of a series that area include to area which has second of policies created for facilitating faster growth, highest of Gross Regional Domestic Product thus what important to do and concern about is from eight strategic areas after Wanarakuti. The speed economic growth up through development development inequality in Kedungsepur can be policies. These policies should support known from Williamson Index calculation data acceleration economic growth which lead to value as follows. convergence. Therefore the government has big role on giving various forms of supporting for Table 1. Williamson Index of Strategic Area increasing income per capita growth in Central Java Province underdeveloped or poor region. Area 20 20 20 20 20 20 Regional development process leads to 08 09 10 11 12 13 economic growth enhancement and equity Kedungsepur 0.7 0.7 0.7 0.7 0.7 0.7 optimalitation. Indicator can be used to know 5 6 4 4 5 5 how success a given region is is its enhanced of Wanarakuti 0.6 0.6 0.6 0.6 0.6 0.6 econoomic growth. Therefore government 8 8 8 8 7 7 always fix growth rate target in its planning and Subosukawono 0.3 0.3 0.3 0.3 0.3 0.3 goals development. sraten 4 4 6 6 6 6 Bregasmalang 0.2 0.2 0.2 0.2 0.2 0.2 To increase economic growth and region 3 4 2 2 2 1 development equity, government of Central Java Petanglong 0.3 0.3 0.3 0.3 0.3 0.3 Province conducted regional cooperation areas 1 2 2 2 2 2 which useful in development equity in a given Barlingmascak 0.5 0.5 0.5 0.5 0.5 0.5 area. According to the provincial regulation of ep 7 7 7 7 7 7 Central Java No.21 2003 about Spatial Plan of Purwomanggu 0.3 0.3 0.3 0.3 0.3 0.3 Central Java Province, lies in the sixth section ng 0 0 4 5 5 5 stated The Development of Strategic and Priority Banglor 0.2 0.2 0.2 0.2 0.2 0.2 Areas. 3 2 0 1 1 1 Strategic Development Area is the Source: Central Java Statistic Agency (processed) development area which has productive resources to be developed both in regional or Based on Williamson Index strategic area national extent, regional agglomeration, strategic of Central Java Province above provide the position, and has impact in national and regional highest inequality is on Kedungsepur area development. Area in this concept is space which explained with WI about 0,75 in 2008, next the have geographic entity integrated with concerned second is Wanarakuti explained with WI about factors, where that constrained system is not 0,68, while the lowest inequality is on Banglor decided by base of administration and can be explained with WI about 0,27. Inequality in divided to some regional functions. Strategic Kedungsepur area had declined in 2010, nevertheless furthermore it keep rising up till 211

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2013. Inversely proportional to Wanarakuti Province also regard to characteristic similarity which inequality had risen in 2010 but continued on each Regencies/Municipal to be able to work to decline in the following years till 2013. better together and constructed synergicity so the Williamson Index Table also provide that until concerned areas can make a reciprocal relation 2013 turns out inequality in Kedungsepur still on each other in needs and advantages in a single high position even the government constructed area, furthermore it is expected income equity development of strategic area is to reduce could occured. Nevertheless the reality is inequality as a solution. Inequality in inequality still occurs in Kedungsepur Area. Kedungsepur Area also can be seen from HDI data below: RESEARCH METHOD

This research is quantitative research Table 2. Human Development Index (HDI) sourced from secondary data. Data used in this each Regencies/Municipalities in Kedungsepur research is secondary data sourced at Statistic in 2008-2013 Agency and Regional Investment Agency Reg/Mun 2008 2009 2010 2011 2012 2013 Ave reported 2008 until 2013. The data under study Kendal 69.4 70.1 70.4 70.9 71.5 72.0 70.7 include investment data, HDI, Labor Force

Demak 71.6 72.1 72.6 73.1 73.5 73.9 72.8 Participation Rate, Population, and GDRP per Kab capita. Data used in this research is panel data 73.3 73.7 74.1 74.5 75.0 75.5 74.3 Semarang combination of cross section and time series data. Semarang 76.5 76.9 77.1 77.4 78.0 78.5 77.4 This research use two types of variables, they are Salatiga 75.8 76.1 76.5 76.8 77.1 77.5 76.6 dependent variable and independent variable.

Grobogan 70.2 70.6 70.8 71.3 71.8 72.4 71.1 Dependent variables in this research are inequality and GDRP per capita growth, while Source: Central Java Statistic Agency (processed) the independent variables are investment, HDI,

Labor Force Participation Rate and Population. Based on Table 2 it provides that Data collection method used documentation Semarang Municipality is area that has the method. To know ho much influence highest HDI while the lowest is Kendal. This independent variable in dependen variable will identifies that there is development inequality in be analyzed using multiple linear regression Kedungsepur Area. Semarang Municipality itself model with OLS method (Ordinary Least Square). is administrative area as Capital of the Central

Java Province, therefore in terms of its RESULTS AND DISCUSSION developing area Semarang Municipality is the most developed city rather than other regencies Regression model about the influence of in Kedungsepur area. The difference of investment, HDI, Labor Force Participation Rate development can be seen from public services, and Population to inequality extent in advanced infrastructure development, high level Kedungsepur Area use multiple linear regression of education so that provide competent human method, Ordinary Least Square (OLS) method. resources and capital stock also it provided Equation of multiple linear regression model can another factors of production. According to be seen as follows: Fitriyah and Amin Pujiati (2016) the highest inequality in Kedungsepur area occurs in KTMPGN = 훼푖 + β1logINVSTit + β2IPMit + β3TPAKit

Semarang Municipality with Williamson Index + β4logJPit + 푒푖푡 about 0,61. This appropriate to Neo Marxist KTMPG = −6.308565 − 0.001823logINVSTit Theory that stated economic growth will always + 0.056588IPMit + 0.004441TPAKit increasing the gaps. + 0.156878logJPit + 푒푖푡 Cooperation effort through strategic area construction, government of Central Java 212

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Table 3. Result of Analysis of Multiple Linear development inequality about 0,056588%. Regression Ordinary Least Square Method During 2008-2013 periods, Kedungsepur Area R- belongs to medium level within human Std. Probabili Variable Coef Square Error ty development though. It means that Kedungsepur d began to regard its human resources C - 0.6694 0.0000 6.3085 05 development. Nevertheless, positive regression 65 coefficient means that enhancement of HDI LOG(INVS - 0.0039 0.6456 makes enhancement in development inequality T) 0.0018 25 in Kedungsepur Area. This is possible if the 23 IPM 0.0565 0.0054 0.0000 0.8345 regions which have HDI enhancement are the 88 90 67 regions which have had high level in HDI, TPAK 0.0044 0.0040 0.2862 furthermore it makes widening in difference 41 92 within resident and causes more development LOG(JP) 0.1568 0.0231 0.0000 78 04 inequality. In 2008-2013 periods, the highest HDI The value of constant or intercept which level is owned by Semarang Municipality, statistically significant and negative, provide if according to Linda Tustiana (2013) based on the other variables in model assumed to be zero, Location Question, Shift Share, Klasen Tipology, therefore inequality in Kedungsepur Area is and Scalogram analysis, Semarang Municipality about -6,30 percent. That negative value of growth characteristic pattern belongs to constant indicates this area is not able to resolve developed region and fast developed so its the existing problems, proven with there is development can run better with amenities in a inequality in Kedungsepur Area in 2008-2013 greater degree. Eventhough the other region in about 0,75. It means high inequality occurs in Kedungsepur Area also keep risen up on HDI, Kedungsepur Area. but the region owned better HDI before, keep Based on analysis regression result can be risen up either. This research appropriate to seen that investment has no directly significant Tambunan findings and also support the research influence to inequality in Kedungsepur Area with Herwin Mopangga (2011) carries out which coefficient -0,001823. Within this terms shows stated that HDI positively associated with that government role in triggering growth of development inequality. investment in underdeveloped regions still need Based on regression analysis result can be to be regarded further can encourage economic seen that Labor Force Participation Rate variable growth so that can reduce the gaps. This is not positively associated but not significantly appropriate to Tambunan findings which stated influential to alpha 5% with coefficient about there is positive influence between investment 0,004441 to inequality in Kedungsepur Area. and development inequality. Nevertheless, this This demonstrated that if Labor Force research appropriate to Yuki Angelia (2010) Participation Rate 1% enhanced, it will increase result which stated that investment and the gaps about 0,004441%. This appropriate to inequality are negatively associated, more Sjafrizal findings that stated due to migration is investment used for goods and services less run well, induced labor surplus a single production process, where labor can be absorbed region can not be utilized by other regions who more so that income per capita equity could need it. As a result development inequality across occured (Sadono Sukirno, 1985). regions will tend to be high due to advantages of Based on regression analysis result can be an area can not be utilized by other regions who seen that HDI variable affected positively and need it, so underdeveloped area is hard to push significant with coefficient 0,056588 to inequality its development process. in Kedungsepur Area. This demonstrated that if Based on regression analysis result can be HDI enhanced about 1%, so it can increase seen that population variable is positively 213

Khoir Akfini Didia / Economics Development Analysis Journal 7 (2) (2018) associated and significant with coefficient about per capita on the rest of province over the both 0,156878 to inequality in Kedungsepur Area. countries (Shaoji, 2001). This demonstrated that if population enhanced Based on absolute convergence calculation about 1%, further will increase the inequality can be conclude that there is no absolute about 0,156878. This is appropriate to convergence process across Kedungsepur area Tambunan findings who stated population for 2008-2013 periods. This is demonstrated by structure will affect inequality across regions. coefficient parameter value of initial income per This result also support Nurlaili (2016) findings capita which has positive sign, or has a value where population positively associated and greater than one. significant to development inequality. Based on conditional convergence Population can be a factor which enhance calculation can be concluded there is conditional inequality if population distribution is uneven. Its convergence process across Kedungsepur area uneven population distribution who live a given for 2008-2013 periods. This is demonstrated by area will contribute to affect the economic coefficient parameter value initial income per conditions in that area. capita is smaller than one. Convergence speed of Estudillo (1997) explained that income income per capita is about 0,066271 which distribution is combination of urban-rural indicate that regencies/municipalities income income society, where in common urban income per capita particularly the region which has low society is greater due to various of people income should grow at least 6,63% once a year so activities in urban area. The enhancement of that the economics will comes to steady state. population in urban area will make income There is no absolute convergence across distribution more greater. Aside from that, Kedungsepur Area but there is conditional enhancement of population who skilled and convergence across region in Kedungsepur Area. educated that migrate to urban area makes rural This support Pritchett hypothesis and area lack of reliable human resources who Endogenous Growth Theory which stated that expected to be able to develope rural economics. fast economic growth ain’t the result of poverty Based on sigma convergence calculation but the result over a series of policies created for can be concluded that sigma convergence process facilitating rapid growth. has been occured in Kedungsepur Area denoted To cover half the income per capita by dispersion from income per capita growth inequality that happened, it takes 10,41 years. which more declined. This is appropriate to Furthermore, to cover all over income per capita Neoklasik theory which stated that each region inequality, it takes 20,82 years with provided that or area move towards convergence one level income per capita should increase at least 6,63% given economic growth due to there is a balance for each years. of mastery of production factors across region. Sigma convergence also indicate that CONCLUSION regencies/municipalities in Kedungsepur Area Investment is negatively associated but not experienced positive economic growth. Aside significantly influential to inequality in from it, sigma convergence also stated that to Kedungsepur Area. Human Development Index reduce the gaps can not be done quickly and need (HDI) positively associated and significant to a long term of process, therefore, it is necessary inequality in Kedungsepur Area. Labor Force to develope thorough of the rest of Participation Rate positively associated but not regencies/municipalities to increase economic significantly influential to inequality in growth and reduce inequality like transportation Kedungsepur Area. Population positively infrastructure development, education, influential and significant to inequality in agriculture, health as is done by America Serikat Kedungsepur Area. and Japan that infrastructure developing (public capital) has big influence for increasing output 214

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