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Advances in Social Sciences Research Journal – Vol. 9, No. 2
Publication Date: February 25, 2022
DOI:10.14738/assrj.92.11813. Ramli, A. (2022). Analysis of Economic Development Inequality in Polewali Mandar Regency of West Sulawesi Province Indonesia.
Advances in Social Sciences Research Journal, 9(2). 412-427.
Services for Science and Education – United Kingdom
Analysis of Economic Development Inequality in Polewali
Mandar Regency of West Sulawesi Province Indonesia
Anwar Ramli
Faculty of Economy, State University of Makassar
South Sulawesi, Indonesia
ABSTRACT
This study aims to analyze the imbalance of economic development and the relation
of factors influencing the level of economic development in Polewali Mandar
Regency. This study uses data panels from 2015 to 2019 with the least squares
panel method (PLS) and using software eviews 9 for data processing. This study
uses the Williamson Index and Gini ratio as a dependent variable in describing the
condition of economic development inequality that occurred in Polewali Mandar
Regency. Then the variables of infrastructure, investment, labor force, DAU (general
allocation of funds) and DAK (special allocation of funds) as independent variables.
The results stated that the average value of Economic Development inequality
based on Williamsons index in the period of 2010-2019 by 0.11. While the
infrastructure variables have a negative and significant effect on the imbalance of
economic development on the value of 5% with the value of 0.0273 profitability.
DAU also has a negative but not significant impact on development imbalance in
Polewali Mandar Regency with profitability value of 0.4287. Investment variables,
DAK and labor force (labor force participation rate) have a positive effect on
variables of economic development inequality in Polewali Mandar regency. We
found that infrastructure and DAU should be improved by the central gogernment,
because these variables can reduce the level of income inequality and economic
development in Polewali Mandar Regencys.
Keywords: economic development inequality, development imbalance, Polewali Mandar
Regency, Williamsons Index, Gini Ratio, infrastructure, DAU, DAK, investment, labor force.
INTRODUCTION
Development is an activity process that is considered important and must be carried out by all
countries, because globalization accompanied by technological advances and scientific
developments has had an impact on change and renewal in all aspects of human life. The
development process must cover all aspects, both economic and social, and is a physical reality
as well as the determination of a society to strive as hard as possible through a series of
combinations of social, economic and institutional processes in order to achieve a better life
(Ahmad, 2017).
Its core development aims to make people's lives more prosperous and prosperous. Prosperity
is a condition that is not poor and is the desire of everyone, while prosperity is a part that allows
people to socialize well, calmly and does not cause social jealousy (Ani, 2017).
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Ramli, A. (2022). Analysis of Economic Development Inequality in Polewali Mandar Regency of West Sulawesi Province Indonesia. Advances in Social
Sciences Research Journal, 9(2). 412-427.
URL: http://dx.doi.org/10.14738/assrj.92.11813
The key word for development is capital formation, because to achieve a high development
target in a country requires a large investment value, so the development strategy that is
considered the most appropriate is to accelerate economic growth by inviting foreign capital
and industrializing (Agung, 2016).
In development planning based on local government laws, namely regarding the
implementation of Indonesia's development planning by using three underlying principles in
the implementation of development planning.
The first principle is the principle of decentralization which is the delegation of central
government authority to autonomous regional governments in the implementation of
government affairs. Second, the principle of deconcentration is a form of delegation of authority
from the government to the governor as a representative of the central government in certain
regions/regions. certain tasks (Basri, 2002).
Indonesia, which consists of 34 provinces, has different backgrounds between regions. This
difference is in the form of differences in the characteristics of natural, social, economic, and
natural resources whose distribution is different in each province. This difference becomes an
obstacle in the distribution of economic development due to the concentration of an economic
activity that has an impact on increasing economic growth in several provinces or regions that
have abundant natural resources. These advantages are expected to have a spread effect. It's
just that this natural wealth is not shared by all regions in Indonesia equally. This inequality in
development is caused by differences between regions (Bahtiar, 2006).
However, the high economic growth of a country, province or regency does not mean that all
regions have the same growth rate, due to limitations in terms of the potential of natural
resources, human resources and supporting institutions. Because growth does not appear in
various regions at the same time, growth only occurs in several places called growth centers
with different intentions (Budiantoro, 2008).
This can be seen in Table 1 below issued by the Indonesian Central Statistics Agency from 2015-
2019 as follows:
Table 1 Gini Ratio by Regency in West Sulawesi Province in 2015-2019
Year
Regency/Territory
Majene Polman Mamasa Mamuju Dimensi
on
dead Sulbar National
2015 0.33 0.33 0.37 0.42 0.33 - 0.37 0.41
2016 0.28 0.28 0.32 0.36 0.3 - 0.32 0.41
2017 0.31 0.32 0.34 0.35 0.4 - 0.36 0.41
2018 0.3 0.35 0.32 0.33 0.37 - 0.35 0.41
2019 0.33 0.3 0.33 0.36 0.34 0.41 0.36 0.41
Source: BPS 2020 (data processed)
Based on the table above, during 2015 - 2019 there were still regional disparities in Indonesia,
especially in West Sulawesi using the relative per capita GRDP approach, even though the level
of inequality in West Sulawesi was below the national average. If the value of GRDP per capita
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 9, Issue 2, February-2022
Services for Science and Education – United Kingdom
is relatively more than 1, it indicates that the region is increasingly unequal, whereas if the value
of GRDP per capita is relatively close to 0, then it is more evenly distributed (BPS, 2020).
Inequality has both positive and negative impacts. The positive impact of inequality is that it
can encourage other less developed regions to be able to compete and increase their growth in
order to improve their welfare. Meanwhile, the negative impacts of extreme inequality include
economic inefficiency, weakening social stability and solidarity, and high inequality in general
being seen as unfair (Ahmad,2017). Inequality causes economic inefficiency, because inequality
is high, the overall saving rate in the economy tends to be low, because high savings rates are
usually found in the middle class.
Although rich people can save a larger amount, they usually save a smaller share of their
income, and of course save an even smaller share of their marginal income (Ahmad, 2017).
At the theoretical level, development problems can be overcome by several development
strategies. The Basic Need Strategy is a development strategy to meet the basic needs of the
community, so as to reduce the possibility of the emergence of internal conflicts. Self Reliance
Strategies can be used as a way out to overcome external problems in industrialization, namely
through increasing competitiveness. Sustainable Development is a development strategy that
is able to overcome resource scarcity. These strategies are relatively more convincing and
suitable to be applied in long-term planning in developing countries such as in Indonesia (BPS,
2019).
Therefore, HDI will describe the level of human quality possessed by each region based on the
results of the release of the Central Statistics Agency (BPS) which will be explained in table 2 as
follows:
Table 2.Human Development Index (HDI) According to Regency in West Sulawesi Province.
Year 2015-2019
regencys
Year
2015 2016 2017 2018 2019
Majene 59.93 60.03 60.15 60.21 60.51
Polman 61.04 61.09 61.12 61.14 61.54
Mamasa 70.17 70.20 70.25 70.28 70.38
Mamuju 65.9 66.1 66.28 66.37 66.38
Dimension 64.20 64.44 64.70 64.83 64.93
Dead 66.59 66.78 66.93 67.00 67.2
Sulbar 62.78 63.04 63.32 64.04 64.22
National 67.09 67.70 68.31 68,90 69.55
Source: BPS, 2020 (data processed)
Based on the Human Development Index data, we can see that in the last few years the average
Human Development Index in West Sulawesi is still far below the national HDI average.
Meanwhile, the condition of Polewali Mandar Regency has fluctuated in the last five years which
continues to be in the range of 61. Looking at the HDI condition of Polewali Mandar Regency in
the last five years there has been no significant effort made by the government.