Measuring Levels of Infrastructure Development and its Impact on Regional Growth - Insights from Indonesia

Abstract

Infrastructure development is a linchpin for regional growth, especially in emerging economies like Indonesia. There have been many debates over the necessity of infrastructure investment over direct economic stimuli. This study delves into the critical role of infrastructure in shaping regional dynamics in Indonesia. We employ the Infrastructure Development Index (IDI), a composite metric amalgamating various infrastructure clusters into a singular value. A sample of strategic region in Indonesia are observed in this research, classified into urban and non-urban areas to highlight the different levels of impact the infrastructure development brings. Several regional development indicators such as: (a) economic growth; (b) poverty rate; (c) gini index; (d) human development index; and (e) unemployment rate is used to explore its relationship with infrastructure development. This research shows a nuanced pattern where mainly urban areas exhibiting higher IDI value and higher impact on its regional growth and development. While non-urban areas still experiencing lower impact due to the difficulties in infrastructure access and the disparity of access between the areas. It indicates the prevailing urban bias in infrastructure development, needing an improved urban-rural linkage on overall economic input-output processes. In sum, this study provides further insights into the pivotal role of infrastructure in regional development in Indonesia, offering a roadmap for informed decision-making in the pursuit of comprehensive and sustainable regional progress.