The disparity and the convergence of the economic growth: The study of the new autonomous regions in sumatera, indonesia

Abstract

Purpose: As a province located outside Java Island, the provinces in Sumatera Island have diversity in economic growth among the regions which could lead to the inequality of development. This study aims to analyze the convergence of sigma and absolute beta and also to measure the speed of the convergence of the economic growth in the new autonomous regions in Sumatera. Methodology: The research method in this study used the data panel in the form of Fixed Effect model. Results: The result of the research showed that the convergence of sigma occurred over four years during the study period while the convergence of the absolute beta did not occur. It can be seen from the Gross Regional Domestic Product (GRDP) per capita levels of the new autonomous regions which are lower and it does not grow faster than the new autonomous regions which have higher GRDP per capita levels. The absolute convergence rate is 11 percent per year and the time it takes to close half of the initial half-time conversion (the half-time convergence) is six years.