Template-type: ReDIF-Paper 1.0
Author-Name: Muliadi Widjaja
Author-Email: prcmwx@langet.gsu.edu
Author-Workplace-Name: Andrew  Young School of Policy Studies, Georgia State University
Author-Workplace-Homepage: http://isp-aysps.gsu.edu/index.html
Title: Capital Mobility Among Provices in Indonesia
Abstract: This paper examines the flows of capital within Indonesia. The hypothesis being 
 that capital is perfectly mobile among regions with Indonesia, and that capital is 
 concentrated in the Java and Sumatra islands. To test the hypothesis, savings and 
 investment rates are gathered from the Indonesian Regional Gross Domestic Product and
 compared in different regions with a low regional correlation indicating capital 
 mobility. Economic literature is reviewed to understand some factors that influence 
 savings and investment behavior; they are demographics, real interest rate, regional
 isolation, government policies. The regression work uses two models with savings e
 stimated in deferent ways. The first model states savings as the regional trade balance,
 which is the pure savings of regions. The second model states savings as the sum of 
 regional trade balance and regional investment. After the regression results are discussed,
 the role of the banking sector and a brief financial history are described. The Java 
 regions have experienced centralization of funds, but in comparison other regions with 
 high resources such as Aceh, East Kalimantan, Irian Jaya (West Papua), have only a small
 amount of GDP. 
Keywords: Indonesia, GDP, capital
Length: 25 pages
Creation-Date: 2002-10-01
File-URL: http://icepp.gsu.edu/files/2015/03/ispwp0220.pdf
File-Format:application/pdf
Handle: RePEc:ays:ispwps:paper0220