McCulloch, NeilSjahrir, Bambang Suharnoko2012-06-012012-06-012008-11https://hdl.handle.net/10986/6906Indonesia's "big bang" decentralization in 2001 shifted much of the responsibility for local economic development from central government to district and city governments, which today number more than 450. But the performance of these districts has varied widely. This paper attempts to understand the determinants of sub-national (district/city) growth in Indonesia and map how these determinants have changed since before the 1997/98 economic crisis. The authors exploit a rich dataset that includes a wide range of district-level characteristics, including education, population, cultural, economic, and infrastructure variables, as well as a set of variables relating to distance, to try to explain growth. The analysis finds that, after accounting for differences in other variables, poorer districts tend to grow faster than better off districts. Similarly, there is evidence of spatial divergence, in the sense that districts tend to grow faster if their neighbors are growing quickly. However, the quality of the existing district-level data makes it difficult to identify whether endowments or factors related to distance are systematically associated with growth.CC BY 3.0 IGOAGRICULTUREANNUAL GROWTHANNUAL GROWTH RATEAVERAGE ANNUALAVERAGE ANNUAL GROWTHAVERAGE GROWTHAVERAGE GROWTH RATEBASE YEARDATA ISSUESDECENTRALIZATIONDECOMPOSABLE INEQUALITY MEASURESDEPENDENT VARIABLEDESCRIPTIVE STATISTICSDETERMINANTS OF GROWTHDETERMINING GROWTHDEVELOPING COUNTRIESDEVELOPMENT REPORTDIFFERENTIAL IMPACTDISTRIBUTIVE POLITICSECONOMETRIC ANALYSISECONOMIC ACTIVITIESECONOMIC ACTIVITYECONOMIC CONCENTRATIONECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC GEOGRAPHYECONOMIC GROWTHECONOMIC LITERATUREECONOMIC OPPORTUNITIESECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC PROGRAMSECONOMIC STRUCTUREECONOMIC STUDIESECONOMICSEMPIRICAL ANALYSISERROR TERMESTIMATION RESULTSEXPLANATORY VARIABLESFACTOR ENDOWMENTSFINANCIAL CRISISFINANCIAL SECTORFIXED EFFECTSFOREIGN INVESTMENTGDPGDP PER CAPITAGEOGRAPHIC CONCENTRATIONGEOGRAPHICAL DETERMINANTSGINI COEFFICIENTGOVERNMENT EXPENDITUREGROWTH ACCELERATIONSGROWTH DETERMINANTSGROWTH IMPACTGROWTH MODELGROWTH PERFORMANCEGROWTH PERIODGROWTH PROCESSGROWTH RATEGROWTH RATESGROWTH REGRESSIONSGROWTH THEORYGROWTH TRAGEDYHETEROSKEDASTICITYHIGH GROWTHHUMAN CAPITALINCOME CONVERGENCEINCOME INEQUALITYINCREASING INEQUALITYINDUSTRIALIZATIONINEQUALITY MEASURESLABOR FORCELANDLOCKED COUNTRIESLONG RUNLONG-RUN GROWTHMEAN GROWTHMEASUREMENT ERRORNATURAL RESOURCESNEOCLASSICAL GROWTHNEOCLASSICAL GROWTH THEORYPANEL REGRESSIONSPER CAPITA CONSUMPTIONPER CAPITA EXPENDITUREPER CAPITA GROWTHPOLICY RESEARCHPOLICY VARIABLESPOPULATION DATAPOPULATION SHAREPOSITIVE EFFECTPOSITIVE RELATIONSHIPPOVERTY RATESPOVERTY REDUCTIONREAL GDPREAL INCOMEREGIONAL GROWTHREGRESSION RESULTSRELATIVE INCOMERESOURCE ENDOWMENTSSECONDARY SCHOOLINGSECTORAL COMPOSITIONSIGNIFICANT EFFECTSOCIOECONOMIC INDICATORSSPATIAL ECONOMICSSTANDARD DEVIATIONSTRUCTURAL BREAKTRANSACTION COSTSUNIT OF CAPITALWATER SUPPLYWorld Bank10.1596/1813-9450-4769