Issues in applying spatial autocorrelation on Indonesia's provincial income growth analysis

Document Information

Journal Article

Abstract

Research in regional growth analysis has acknowledged the importance of spatial effects as part of the analysis. Recently, there were several attempts to apply regional growth regression in Indonesia that raise the possible necessity to implement spatial effects in the growth regression. However, as the largest archipelagic country in the world, Indonesia has distinctive features in relation to spatial analysis that can hamper the application of spatial effects. The aim of this study is to investigate the necessity and the issues in applying spatial effects on Indonesia's provincial income per capita growth by introducing the spatial lag and error into the growth regression. The exercise shows the existing problems in applying spatial effects on Indonesia's regional growth regression. Moreover, the conclusion of the growth regression is hardly changed by the inclusion of spatial effects.

Links

Back to publications