Regional Disparity of Infrastructural Development and Aceh Province Economy: An Inter-Provincial Analysis

Abstract

Inequality is not a new problem in Indonesia, as it is in Aceh Province. The availability of different infrastructure in each city and district is one physical example of the imbalance itself because the availability of infrastructure is also a determining factor for the economic growth of each region. In fact, this province receives a special grant from the central government where the funds are specifically for infrastructure development and economic growth. However, the real condition of the province's poverty rate and the highest unemployment rate in the island of Sumatra negates all the privileged benefits of the aid funds that have been allocated for years. Therefore, these infrastructure facilities are very important when considering the conditions of economic growth to be achieved for each region with the ultimate goal of more equitable growth. On the other hand, infrastructure also has an indirect impact on GDP / capita, poverty level and also the total unemployment rate in Aceh Province. In fact, several cities and districts have very high unemployment rates and very low economic growth rates, indicated by the low GDP growth rates of each city and district. On the other hand, the availability of facilities and infrastructure is also a major factor in hampering the progress of economic activity in each region. Hence, this study provides empirical findings regarding disparities between regions in infrastructure in 23 cities / districts in Aceh Province and the impact of these regional disparities on the economy of Aceh Province, particularly economic growth, poverty and unemployment. The unit of analysis is the district level where the Infrastructure Development Index (IDI) is analyzed using the multivariate method to measure the level of availability of facilities. The IDI calculation is based on the nine infrastructure or facilities available in Aceh Province. Furthermore, the level of disparity in infrastructure between regions is analyzed using the coefficient of variation. The effect of IDI on the provincial economy was analyzed using an econometric model. The results of the analysis based on the IDI show that in the 2015- 2019 period, in general the level of infrastructure availability in each district / city was relatively high / low with the average IDI value tending to increase from 0.591 in 2015 to 0.612 and in 2019 the highest IDI score. is 0.807 (Sabang City) and the lowest value is 0.152 (Langsa City). However, based on the analysis of the coefficient of variation in the disparity in the level of infrastructure availability between relatively small areas, it is less than 0.3 and tends to decline. Based on the results of the regression analysis, it shows that the level of infrastructure availability, IDI in general affects the economic conditions of Aceh Province and specifically there are different types of infrastructure that affect each economic condition (economic growth, unemployment and poverty). Of the nine infrastructure variables, only three variables can reduce poverty, namely electricity, roads and hotels infrastructure; only one variable can reduce unemployment, namely road infrastructure and there are three variables that increase economic growth, namely rural electricity infrastructure, hotels and banks.