Impact of Infrastructure Development on Economy Growth and Inequality in Indonesia Land Borders

Abstract

Indonesia borders, especially land borders, have complicated problems. That is security, social, and economic ones. The problems make the management of land borders different from that of other regions. The length of Indonesia land borders and limited defense resources makes the guarding it must be done by community around that area. For solving the problems so development approach including for land borders not only from security side but also from welfare side. The goal of long term development not only high growth but also to spread the result of development over region and individuals, with the result that reduce inequality. Infrastructure development is believe can increasing society income then can push teh economic growth. Choosing the right infrastructure development can boost economic, especially in land borders. The purpose of this study is to analyze the impacts of infrastructure on economic growth and inequality in Indonesia land borders. Using static panel data and two stage least square (2SLS) estimation method, this study shows that development of social infrastructure can raise per capita income. The social infrastructures investigated are number of high schools and number of healthy facilities. Telecommunication facility can also raise per capita income. The income inequality is positively influenced by income per capita growth and industry sector laborer. Infrastructures have indirect relation with income inequality, that is by raising income per capita. Concerned with that, development of social infrastructure should be priority in the land borders area. To encourage use of social infrastructure, so can improve economy growth, then 12-year compulsory education program and improve health facility, puskesmas, become inpatient and 24-hour clinic must be implementing in land borders area.