I Made Suparta Fakultas Ekonomi.
Universitas 17 Agustus 1945 e-mail: suparta.
imade@yahoo.
Abstract The objective of this paper is of twofold.
First, it analyzes the disparity distribution of percapita income among regions in East Java Province.
Second, it analyzes the correlation beetwen economic growth and disparity distribution of percapita income among regions in East Java Province.
It uses Williamson disparity index and Pearson correlation to analyze the data.
In the period of 2001-2007, the disparity index shows that distribution of percapita income among regions in East Java Province is getting unbalanced and the correlation beetwen economic growth and disparity distribution of percapita income among regions in East Java Province is positive and significant.
Keywords: Income per capita, disparity, economic growth JEL classification numbers: O16.
O18.
O49
INTRODUCTION
Economic growth is one of the most important goals in economic development.
This helps to meet the raise in economic needs as the result of the increase in population Therefore, sustainable economic growth is precondition to the process of economic development.
This can be achieved by increasing the total output or Gross Domestic Bruto (Syafriont, 2.
Percapita gross domestic product (PGDP) is the value of gross domestic product divided by the population size.
reflects three measures, namely level of wealth achieved by a conutry at a certain year, description about the speed of economic development, and discrepancy of economic performances across countries (Sukirno, 2.
Higher PGDP can be achieved if the GDP grows faster than its population size.
Besides this economic growth, another target in economic development in any country is to equally distribute the output of economic development to all people in the To achieve such goal, the government need to arrange policies, both fiscal and monetary policies, in such a way that people in all level of income are benefited from the process of economic development.
Another important target of economic development is to create job opportunities.
The economic development in a given country not only should increase the percapita gross domestic product, but also to make sure that the share of people life under poverty line decreases.
The next target is to create job opportunities, which is important in reducing the unemployment level.
This target is important, since social problems are mostly emerged from the high level of unemployment.
To achieve such a goal, the government has to make sure that the growth of job opportunities created is higher than that of labor forces (Sukirno, 2.
Yudhoyono has stressed out the importance of national development strategy which is pro-growth, pro-job, and pro-poor.
Pro-growth strategy means that all programs or activities are directed to achieve high economic growth.
This strategy is important in boosting added value, especially in agricultural sector, which supports most people in developing countries, such as Indonesia.
With this strategy, it is hope that various activities related to agricultural sector, such as industry and services, will grow as well.
Eventually, it is hope that job opportunities are created.
As more people are involved in production process, more people will have spending power, so the economy as a whole will increase.
The main goal of pro-job strategy is to release people from their poverty trap (Effendi, 2.
Economic growth and income distribution are two of most important goals to be achieved in an economic development According to Munawar Ismail .
n Abipraja, 2.
, the relationship between economic growth and income distribution remains a controversy until this recent day.
Some scholars argue that income distribution can not be achieved along with the high economic growth, while some others suggest that both can be achieved at the same time.
Thee Kian Wie .
n Abipraja, 2.
said that high economic growth and income distribution are not always in a negative relationship, even though it is true that in most developing countries, economic growth is always accompanied by higher uneven income distribution.
However, there are some exception, such as that of South Korea and Taiwan, where high economic growth is accompanied by a high measure of income distribution.
The history has said that economic development in developed countries is accompanied by more equally income distribution, while that of developing countries are not.
In some developing countries, development activities provide benefits only to some group of people.
This kind of developments may bring modernization into an economy, but it fails to provide the ultimate goal, namely to provide higher standard of living for common people (Sukirno.
At the early state of Indonesian development, it was not easy to achieve both goals, namely high economic growth and high level of income distribution, at the same time, due to the funds availability.
meet such situation, the economic development was first focused on some key sectors in Java.
It was hoped that the strategy will be followed by the growth of other sectors, as the result of the trickle down effect (Tambunan, 1.
Latter in the era of Soeharto, the second president of Indonesia Republic, the government choose the unbalanced economic strategy.
According to Hirschman .
, unbalanced development strategy is more appropriate to developing countries as those countries are lack of capital and other resources to invest in all sectors and all regions at the same time.
In such situation, investment need to be focused on some key sectors and industries, and the benefit can be used to funds the development in other sectors.
Therefore, the process of economic development will evolve from the unbalanced to balanced economic development.
In another perspective, the development will spill over from one sector to the others and from one region to the others.
Different from Hirschman.
Rosenstein-Rodan .
suggests that big investment in all area at the same time .
ig push or balanced growth strateg.
will increase investment, which is the most efficient to the whole economy.
This kind of investment will create markets to all industries, which is important in cutting the vicious circle of poverty in less develop The focus of development in East Java province is on fostering economic growth, maintaining income distribution, and empowering local people (East Java Province and BPS, 2.
Regional government is a subsystem in province development, which belongs to the bigger system, namely Indonesian development.
The economic development reflects aspiration, potential, prob- Economic Growth and A (Supart.
lems and needs of people in the region.
an attempt to enhance regional economic growth, we need to map resources and potential in each region.
The government has work hand-in-hand with people in the region in such a way that not only the growth of economic achieved, but job opportunities also created for the labor force (East Java Province and BPS, 2.
Economic development in each region bring about different results, depends on the resources and infrastructure in the This has led to discrepancies not only across sectors, but also across region .
, especially those of between cities and non cities.
Sectoral uneven economic development can be seen from the distribution of added value percentage produced by each economic sector.
A study by Suparta .
in East Java Province shows that there are three dominant economic sectors and six non dominant economic sectors.
The three dominant sectors are trade, hotel, and restaurant with average of added value distribution of 28.
25 percent, industrial sectors with that of 27.
68 percent, and agricultural sector with that of 17.
96 percent.
The six non dominant sectors are services, transportation and communication, financial, rental and company service, construction, mining, electricity, gas and water, with the average added value of 8,34 percent, 5,67 percent, 4,93 percent, 3,57 percent, 1,97 percent and 1,64 percent, respectively.
Suparta .
also measures the variance of those statistics from 2001 to 2006, which shows a positive trend.
suggests that the economic development has become more unequal during the time period (Table .
Table 1: Variation in Added Value across Economic Sectors in East Java Province Year Source: Suparta, 2008.
Economic development performance in each region is reflected in their Percapita Regional Gross Domestic Product (PGRDP).
Major economic activities in most countries are concentrated in certain regions which have an impact on the disparity of income across regions.
The impact is worsened by the work of multiplier, so that the income disparity across regions is getting bigger from time to time.
Economic development disparity across regions is reflected by the different of percapita income across those regions.
One of the measures to the disparity is by the so called disparity index.
Suparta .
reports the disparity across regions in East Java as in Table 2.
Table 2: Disparity Index in East Java Province .
Year Kabupaten City of Source: Suparta, 2005.
Variance Kabupaten City of Smaller disparity index .
ity plus distric.
shows that percapita income distribution across regions in East Java Province from 1998 to 2001 is getting more evenly distributed.
This is also the case for percapita income distribution across cities from 1998 The more even percapita income distribution across regions from 1998 to 1999 is reflected by the tendency of their disparity index to be smaller.
However, from 1999 to in 2001, the disparity index slightly increased.
The most even percapita income distribution is that of across district (Kabupaten, in Indonesi.
, followed by that of between cities.
The most uneven percapita income distribution is that of across kabupaten and cities.
Economic development discrepancy across regions represented by the variability in their percapita income can be analyzed using relative comparison analysis among regions, compare mean analysis with one-sample t test method and nonparametric test using chi-square.
Suparta .
analyzed the difference between percapita regional gross domestic product in East Java Province in 2007 and suggests that from its 38 regions, there exist 31 regions or 81.
58 percent of them are below the average.
It means, there are only 18.
percent of them are above the average.
Hypothesis testing on the difference between percapita gross domestic products in East Java Province in 2007 using chisquare result in chi-square value of 15.
with significance level of 0.
000, which is of course lower than 0.
It can be inferred that there is a significant evidence to support the hypothesis that there exist the discrepancy between regions with higher and lower than the percapita regional gross domestic product.
Based on one-tailed t test, from the 31 regions which has percapita gross domestic product (PGRDP) lower than the average of PGRDP, there exist nine regions with PGRDP which are very different from the average of PGRDP.
From seven regions with PGRDP bigger than the average of PGRDP, there exist 3 regions with PGRDP significantly different from the average, while the other 4 regions have the PGRDP which are not different from the average.
Economic discrepancy across regions has caused people to migrate to the more prosper region, mostly from one less to more job opportunities.
The economic policy therefore needs to be directed towards harmonizing economic development across these regions.
Special attentions are crucial for some remote regions, with less access to resources and other regions.
The discrepancy of economic development across regions is caused by the in optimality of the use resources in the production process.
Another reason for the discrepancy is the lack infrastructure provided by the government to support the investment conducted by business people.
In an effort to reduce the discrepancy of economic development across regions, the government needs to impose both the appropriate economic and non economic This might work as those policies will create stability in economic growth.
In conducting the economic development, the government applies the strategy of increasing economic growth and focuses on micro business institutions and the fulfillement of common people rights.
The aforementioned description motivates this paper to analyze disparity of percapita income distribution among regions in East Java Province.
Furthermore, this paper will also analyze the relationship between economic growth and percapita income distribution disparity in the province.
METHODS
This paper analyzes disparity of percapita income distribution across regions in East Java Province using time series data from It also analyzes the relationship between economic growth and disparity of percapita income distribution across regions Economic Growth and A (Supart.
in East Java Province.
The data are from Bereau of Central for Statistics (Badan Pusat Statisti.
East Java Province.
The data analyzed are percapita Regional Gross Domestic Product and population size of each region .
abupaten/cit.
, as well as economic growth in the province level.
To analyze the disparity in percapita income distribution across regions, the paper uses disparity index using weighted coefficient developed by Williamson as follows:
IW =
i =1 ( y i Oe y )2 i y 100 , .
IW = Williamson index or disparity index y = mean of percapita GRDP in East Java y i = percapita GRDP in each region = proportion of district to province population size in East Java Province The higher the index, the higher the discrepancy of development across regions is, and vice versa.
To analyze the relationship between economic growth and this disparity index, the paper uses product moment correlation analysis using SPSS software To test the relationship between economic growth with disparity index, the paper uses t and r tests.
RESULTS DISCUSSION
The data analyzed in this paper is percapita regional gross domestic product .
er capita GRDP) based on current price in 38 regions .
abupaten plus citie.
in East Java Province, consisits of 29 kabupaten and 9 cities, and data on economic growth in the province.
Table 3 shows percapita GRDP based on current price in the region for the period of 2001-2007.
In the period, all regions experience the increase of percapita GRDP, but it varies across regions.
The data on the table are listed from those with the highest to the smallest using 2001 as the benchmark.
There are five cities with percapita GRDP of higher than that of the province, namely city of Kediri.
Surabaya.
Malang.
Mojokerto and Probolinggo (Table .
The other four have percapita GRDP of less than that of the province.
The non-city .
exist in the province are 29 kabupaten.
From all of them, only two who have percapita GRDP higher than that of the province, namely Kabupaten Gresik and Kabupaten Sidoarjo.
Therefore, in the period of 2001-2007 there are seven regions with percapita GRDP which are higher than that of the province.
Moreover, during the period, the sequence of kabupaten based on the value of percapita GRDP remains the The sequence, from the highest to the lowest percapita GRDP, is City of Kediri.
City of Surabaya.
City of Malang.
Kabupaten Sidoarjo.
Kabupaten Gresik.
City of Mojokerto and City of Probolinggo.
The sequence is influenced by the development of manufacture industries conducted by the regions, as this provide higher added value compared to that of primary industries and agriculture sector.
Other factors influenced such differences are the development in trade, hotels and restaurant which are higher in the leading regions.
The regions which percapita lower than that of the province, which are 31 regions in total, have a lot of changes in their The lowest five regions are Kabupaten Pamekasan.
Kabupaten Pacitan.
Kabupaten Bondowoso.
Kabupaten Trenggalek, and Kabupaten Sampang.
These five regions are commonly characterized by the dominance of agriculture sector, while the land in the area is not fertile.
From 32 regions with percapita GRDP higher than that of the province, the sequence is keep changing every year.
Regions with significant increase in position are City of Madiun .
rom rank 12 to .
as the increase in its manufacturing sector.
Other regions experiencing the same thing are City of .
rom rank 16 to .
Kabupaten Tuban .
rom rank 17 to .
Kabupaten Bojonegoro .
rom rank 24 to .
Kabupaten Ngawi .
rom 33 to .
, and Kabupaten Bondowoso .
rom 36 to .
Most of the increase in position is influenced by the performance in manufacturing sector, mining industries, as well as trade, hotel, and restaurant businesses.
Table 3: Percapita GRDP based on Current Price in East Java Province Regions, 2001No 2007 .
n IDR) Kabupaten/City of Kab.
Pacitan 2367054 2656068 2931497 3158631 3636857 3939410 4382223 Kab.
Ponorogo
2972501 3317952 3606690 3957368 4554165 5260707 5902008
Kab.
Trenggalek
2571433 2788663 2985204 3200512 3594813 4173087 4678876
Kab.
Tulungagung 5805961 6612531 7331288 8170674 9501490 11034623 12425952 Kab.
Blitar
3869844 4350205 4892066 5486115 6390506 7452193 8473920
Kab.
Kediri 3515148 3873240 4280370 4806798 5487730 6438973 7301054 Kab.
Malang
4649427 5239715 5744860 6303279 7314212 8640609 9724101
Kab.
Lumajang
4610913 5147716 5701377 6362382 7489871 8930921 9966343
Kab.
Jember
3632233 4082499 4515987 5030145 5888686 6988880 7859855
Kab.
Banyuwangi 5131881 5669750 6222147 6846653 8039895 9747088 11047313 Kab.
Bondowoso
2459097 2746152 3043552 3371288 3934274 4712866 5278966
Kab.
Situbondo
4398287 5055095 5626518 6274175 7370605 8758863 9855535
Kab.
Probolinggo 4830974 5445197 6089289 6797060 7794009 9235064 10366175 Kab.
Pasuruan 3658765 4186116 4554195 5084933 5913821 6893705 7781301 Kab.
Sidoarjo
12237659 13684415 15095741 17209796 19859131 21639519 24225436
Kab.
Mojokerto
4866985 5480522 6049453 6786468 7861921 9127630 10190369
Kab.
Jombang
4039655 4480818 4970571 5483721 6349440 7637836 8535400
Kab.
Nganjuk
3377895 3817408 4225636 4668427 5389920 6461607 7313328
Kab.
Madiun
3277887 3792756 4159339 4540268 5220567 5995025 6682561
Kab.
Magetan 4020589 4573978 5038290 5570444 6474680 7612049 8519770 Kab.
Ngawi
2935732 3339076 3688801 4063024 4619604 5422497 6092177
Kab.
Bojonegoro
3717366 4226294 4709915 5192166 5998790 7512801 8835603
Kab.
Tuban
4504647 5104196 5727276 6464724 7552908 8950688 10226489
Kab.
Lamongan 3136762 3467567 3839504 4240087 4858688 5246163 5877511 Kab.
Gresik
10955989 12599220 13906959 15322086 17890461 20743471 23496342
Kab.
Bangkalan 3036335 3411747 3778341 4077161 4700917 5313404 5830853 Kab.
Sampang
2749530 3068585 3321612 3590765 4118778 4399958 4789960
Kab.
Pamekasan 2352657 2642861 2902088 3158904 3621444 4172975 4615107 Kab.
Sumenep
4229563 4644838 5177577 5649435 6567657 7418610 8177974
City of Kediri 78924273 85878127 100470120 114025434 135790940 158053364 171621700
City of Blitar
4250998 4804004 5298954 5855760 6820390 7984592 8954615
City of Malang
12709044 14179692 15601122 17609286 20892111 24635119 27761270
City of Probolinggo 7255156 8408559 9374705 10643645 12539058 14706920 16579768
City of Pasuruan 4515318 5193896 5792967 6466362 7503721 8935329 10335050
City of Mojokerto 8174963 9658545 10971250 12407682 14515799 15602829 17641236
City of Madiun
4846673 5753253 6519908 7397238 8693004 9984741 11475365
City of Surabaya 22279177 26008757 29385276 33392131 39618187 45012771 51608615
City of Batu
5206234 5930633 6569387 7499533 8714132 10233126 11450675
Jatim
6563551 7435411 8302750 9301338 11002813 12557193 14153550
Source: Statistics of East Java.
Economic Growth and A (Supart.
Table 4: Percapita GRDP Rank based on Current Price in East Java Province, 2001-2007 Kabupaten/City of City of Kediri City of Surabaya City of Malang Kab.
Sidoarjo Kab.
Gresik City of Mojokerto City of Probolinggo Province of Jawa Timur 8 Kab.
Tulungagung 9 City of Batu 10 Kab.
Banyuwangi 11 Kab.
Mojokerto 12 City of Madiun 13 Kab.
Probolinggo 14 Kab.
Malang 15 Kab.
Lumajang 16 City of Pasuruan 17 Kab.
Tuban 18 Kab.
Situbondo 19 City of Blitar 20 Kab.
Sumenep 21 Kab.
Jombang 22 Kab.
Magetan 23 Kab.
Blitar 24 Kab.
Bojonegoro 25 Kab.
Pasuruan 26 Kab.
Jember 27 Kab.
Kediri 28 Kab.
Nganjuk 29 Kab.
Madiun 30 Kab.
Lamongan 31 Kab.
Bangkalan 32 Kab.
Ponorogo 33 Kab.
Ngawi 34 Kab.
Sampang 35 Kab.
Trenggalek 36 Kab.
Bondowoso 37 Kab.
Pacitan 38 Kab.
Pamekasan Source: Data estimation.
From Table 5.
City of Surabaya is a city with the highest population, followed by Kabupaten Malang.
Kabupaten Jember.
Kabupaten Sidoarjo and Kabupaten Banyuwangi.
The five regions with the least population are City of Mojokerto.
City of Blitar.
City of Madiun.
City of Pasuruan and City of Batu.
Table 5: Population Size in Kabupaten/City of 2001-2007 Kabupaten/City of Kab.
Pacitan 532726 535674 538392 542556 546150 549768 553865 Kab.
Ponorogo
864424 866995 869359 875448 880701 885968 892527
Kab.
Trenggalek
663790 667582 671076 677185 682465 687786 691207
Kab.
Tulungagung 949197 954853 960067 968983 976691 984460 992248 Kab.
Blitar
1100663 1105902 1110726 1121716 1131222 1140809 1144528
Kab.
Kediri 1454244 1464954 1474840 1493209 1509135 1525231 1531187 Kab.
Malang
2322699 2331120 2338865 2368372 2393959 2419822 2442422
Kab.
Lumajang
987939 993971 999533 1009349 1017839 1026400 1034334
Kab.
Jember
2205492 2219175 2231793 2248968 2263794 2278718 2293740
Kab.
Banyuwangi 1526870 1533679 1539948 1552867 1564026 1575265 1580441 Kab.
Bondowoso
700692 704831 708646 714835 720183 725571 727790
Kab.
Situbondo
613778 617570 621067 626600 631382 636200 638537
Kab.
Probolinggo 1017365 1027181 1036262 1048616 1059322 1070137 1081063 Kab.
Pasuruan 1381027 1401079 1429716 1443550 1464297 1485342 1496474 Kab.
Sidoarjo
1592385 1638669 1682278 1738285 1787771 1838666 1869350
Kab.
Mojokerto
938758 954161 968502 989965 1008740 1027871 1041269
Kab.
Jombang
1152962 1163083 1172439 1187178 1199958 1212876 1233279
Kab.
Nganjuk
1015318 1022050 1028260 1041812 1053569 1065459 1073126
Kab.
Madiun
653421 655243 656918 660873 664282 667709 667841
Kab.
Magetan 621738 621222 620750 621160 621511 621862 622966 Kab.
Ngawi
833944 837072 839949 846355 851884 857449 860029
Kab.
Bojonegoro 1195706 1204542 1212700 1226691 1238811 1251051 1263411 Kab.
Tuban
1061529 1069618 1077088 1087121 1095795 1104538 1107691
Kab.
Lamongan 1221528 1229000 1235890 1249867 1261972 1274194 1281176 Kab.
Gresik
1026488 1043747 1059822 1081800 1101000 1120541 1142817
Kab.
Bangkalan 864279 875584 886077 907651 926560 945863 965568 Kab.
Sampang
812575 823498 833640 855405 874512 894046 914016
Kab.
Pamekasan 722148 731487 740154 755331 768587 782076 795801 Kab.
Sumenep
1016812 1024843 1032260 1045501 1056985 1068595 1076592
City of Kediri 251697 251872 252033 253287 254367 255452 258734
City of Blitar
122683 123027 123344 124203 124944 125689 127338
City of Malang
756294 762155 767567 773703 779002 784337 791970
City of Probolinggo 196591 198493 200252 203056 205490 207953 210446
City of Pasuruan 172840 174859 176730 179587 182072 184591 185507
City of Mojokerto 110100 111087 111999 114339 116383 118464 119051
City of Madiun
169595 169536 169481 170260 170931 171605 173447
City of Surabaya 2633067 2647283 2660381 2681092 2698972 2716971 2720156
City of Batu
170030 173763 177256 181631 185467 189384 192059
Jatim
35633394 35930460 36216060 36668407 37070731 37478719 37794003
Source: Statistics of East Java.
City of Surabaya as the capital city of the province and also as the industrial district provides more job opportunities compared to the other regions.
This has made this region attracts more people and labor force from the nearby regions.
From Tables 3 and 5, percapita GRDP in City of Kediri is higher than that of City of Surabaya.
This happened because the population size in City of Kediri is smaller than that of City of Surabaya.
Economic Growth and A (Supart.
Table 6: Disparity Index and Economic Growth, 2001-2007 Disparity Index (IW)* Year Kabupaten City of Kabupaten Source: * Data estimation.
** Statistic of East Java.
Based on the analysis on disparity index presented in Table 6, it can be seen that percapita income distribution across regions in 2002 has become more equal compared to that of 2001, indicated by the decreasing disparity index.
During the period of 2003-2005, the index increases significantly, before decreasing during the period of 2006-2007.
Overall, the index in 2007 is higher than that of 2003, indicating that the percapita income distribution is getting more unequal.
Disparity index across cities behaves the same way as the index across regions .
abupaten plus citie.
This means that percapita income distribution across cities has become more equal during the first period, becomes less equal in 20032005, and becomes more equal during the period of 2006-2007, but overall, the index in 2007 is higher than that of 2003, indicating that the percapita income distribution is getting more unequal.
Disparity index for kabupaten from 2001-2005 increase that is signals the tendency towards unequal income distribution across kabupaten.
However, in 2006, the index decreases significantly, even lower than that of 2001, indicating more equal income distribution, before it increases again in 2007.
The high disparity index fore regions .
abupaten citie.
compared to that of cities in isolation and kabupaten in isolation suggesting the high discrepancy across
City of Economic Growth
(%)**
kabupaten in one side and cities on the other side.
Comparing disparity within cities in one side and disparity within kabupaten on the other side, the former is higher than the It means that the income discrepancy within cities is higher than that of within The disparity index in the province can be easily understood by looking at the figure, constructed from the data in the table, such as that of Figure 1.
The figure shows the lowest disparity index belongs to non-cities .
amely belongs to Kabupate.
, which indicates that those regions have more equal income distribution than that of The condition for the cities are on the opposite, namely they have more unequal percapita income distribution.
If we combine both cities and kabupaten, as we guessed, the group has the most unequal percapita income distribution.
This stems from the very different performance of economic development between kabupaten and cities area.
Table 7 shows the difference between disparity index within cities and within kabupaten.
The increasing discrepancy between disparity index within cities and that of within kabupaten suggests the increase in percapita income distribution across cities in one side and that of across kabupaten, as have been witnessed in 2003, 2005 and 2006.
However, the discrepancy is lower in 2002, 2004 and 2007.
Disparity Index
114,45
115,81
117,26
96,18
97,81
97,93
98,42
55,13
55,78
56,09
57,91
58,36
111,97
98,02
116,88
115,39
97,78
53,65
Year Regencies and Municipalities Regencies Municipalities Source: Data estimation.
Figure 1: Development of Disparity Index In 2002, the difference in disparity index for cities and that of kabupaten decreases.
This was caused by a decrease in cityAos index and an increase in kabupatenAos In 2004, the difference increases, where the index in cities is higher than that of kabupatens.
In 2004, the difference decreases, before increases in 2005, especially the sharp increases in 2006, caused by decrease in cities disparity index.
However, the difference is sharply decreases in 2007, as the result of the big increases in kabupatenAos disparity index.
Table 7: Disparity Index in Cities and Kabupaten.
East Indonesia Province Year Source: Data estimation.
Difference From Figure 2, we can see that the disparity index is constant in the long run.
It means that there is no difference across However, we can see some fluctuation in the figure.
The lowest are in 2004 and 2005, with the highest in 2006.
The slight increase in the long run disparity index curve might need a test, wither t or r To analyze the relationship between disparity index in cities and in kabupaten, the paper uses product moment methods, using SPSS software package.
It is found that from 2002-2007 the correlation coefficient is 0,044, showing no correlation between both index.
In fact, the t and r test showing that the relationship is not significant, as suggested by the probability level of 0,926, which is much bigger than 0,05 .
%).
Table 6 shows the positive trend in economic growth in the province, with an insignificant interruption in 2006.
This can be clearly shown in Figure 3.
The correlation between economic growth and year, as Economic Growth and A (Supart.
Disparity Index suggested by the product moment correlation coefficient of 0.
916, is very strong.
This means that we can hope an increase of economic growth in the years to come.
The t test shows a significant relationship, as shown by the probability of 0.
004, which much lower than 0.
Based on the data on Table 6, there are three conditions that have been achieved from the economic activities in the province.
First, in 2003 to 2005, there has been an increase in economic development followed by an increase in disparity This means that the increase in eco45 nomic development has been followed by the more unequal income distribution.
Second, in 2006, there has been a decrease in both economic development and percapita income distribution.
This means that the decrease in economic growth has been accompanied by the increase in percapita income distribution.
Third, in both 2002 and 2007, there has been an increase in economic development followed by the decrease in disparity index.
This means that during two periods, the economic growth has been followed by the more equal percapita income distribution.
Difference Year Linear (Differenc.
Source: Data estimation.
Economic Growth Figure 2: Differences of Disparity Index between Cities and Kabupaten, 2001-2007 Year Linear (Economic Growt.
Economic Growth Figure 3: Economic Growth in East Java Province, 2001-2007 To analyze the relationship between economic growth and disparity index, the author calculates the correlation using product moment method in SPSS software It can be shown that the correlation coefficient is 0,932, suggesting that the correlation between economic growth and disparity index in East Java Province from 2001-2007 is positive and strong.
It means that the higher the economic growth, the higher the disparity index is.
To test the relationship between economic growth and disparity index, the author uses t and r tests.
The data analysis shows the significant level of 0,002, suggesting that there is a significant relationship between economic growth and disparity index.
The relationship between economic growth and disparity index is positive and significant, showing that the economic development process has been imbalance.
This means that the good performance in economic development is accompanied by the tendency of income distribution to more CONCLUSIONS From 2001-2007 there 31 regions .
abupaten or citie.
58 percent of regions with percapita GRDP lower than the average in the province, and there are 7 regions or 18,42 percent regions with percapita GRDP higher than the average.
Economic development process in East Java Province from 2001-2007 has shows the distribution of economic development outputs which are measured by the percapita GRDP which the tendency of becoming more unequal.
This has the relationship with the potential ones by each region, which make the priority and focus of economic development is different from one region to the others.
Based on the hypothesis testing on correlation, it is found that the relationship between economic growth and disparity index of percapita income distribution is positive, showing that high economic growth is not accompanied by the equal income distribution across regions.
Therefore, activities in economic development are not yet meet the framework of economic development in East Java Province.
Economic development by focusing on industrial sector as the leading sector will accelerate percapita income growth.
This strategy will accelerate the creation of job opportunities which is very important in cutting the unemployment level.
To develop the industrial sector especially that of manufacturing sector, we have to select strategic regions without sacrificing agricultural area.
Another way to enhance percapita income growth is by spreading the economic development process into the whole regions and economic sectors.
This strategy will also increase job opportunities in the whole economy.
One thing might be of helps is that we love our own products, as have been campaigned by many countries, even the developed ones.
However, the increase in percapita GRDP is not a guarantee that people in general are wealthier.
Another variable need to be consider is the income distribution that accompanying the development We have to make sure that income distribution is of equal, so that most people enjoy the outputs of the economic development, not only a bunch of rich and powerful people in the economy.
Percapita GRDP as a measure of economic development need also consider whether the region is a city or non-city.
People with the same level of income will probably be happier if they live in rural area, as living cost and standard are lower than that of in cities.
The development of infrastructure initiated by the government such as the famous Suramadu Bridge will enhance economic activities which eventually increase percapita income in Surabaya and Madura, as well as area nearby the regions.
Economic Growth and A (Supart.
Industrial development with medium and big scales in industrial districts will cause urbanization.
This has created various social problems.
However, urbani- zation does not have to be avoided.
What we need to do is organize them in such a way to minimize its negative effects (Gill.
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