The Fundamental Economic Structure in Developing Countries ... · 2. THE FUNDAMENTAL ECONOMIC...

Economics and Finance in Indonesia Vol. 52 (2), 23 - 141

The Fundamental Economic Structure in Developing Countries:

An Empirical Evidence of Indonesia M . H a n d r y I m a n s y a h

G u y R. West Rodney C . Jensen

Abstract

The aim of this paper is to identify fundamental economic structure (FES) in some regional economies in Indonesia. In general, the finding supports the fundamental economic structure hypothesis. However, results of this study differ from the previous findings, in that the fundamerital economic structure is not just contained only in the secondary and tertiary sectors, but also in the primary sectors. Some cells in the interaction of primary-primary and primary-secondary are also significant in the EES. There are some possible explanations for this phenomenon. First, Indonesia is in the early stage of industrialization. Therefore, some primary sectors are still predominant in its regional economies. In other words, subsistence agriculture still occurs in the Indonesian regional economies. Second, Central Government policy is to obtain self-sufficiency in food production at the regional level. Third, limited infrastructure and transportation cause regional trade barriers; therefore, specialization has not developed so far in regional economies. Compared to Australia which is in a mature stage of its development, Indonesia still lies in its early development stage. Therefore, some of the primary sectors are still a part of the fundamental economic structure.

Keywords: Fundamental Economic Structure-Regional economics-Indonesia J E L Classification: RIO, R19

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1. I N T R O D U C T I O N

J e n s e n , W e s t a n d H e w i n g s ( 1 9 8 8 ) f o u n d t h a t s o m e a s p e c t s o f r e g i o n a l e c o n o m i e s a r e s y s t e m a t i c a n d r e g u l a r o v e r s p a c e a n d t i m e . T h e y d e v e l o p e d a h y p o t h e s i s t h a t t h e r e i s a b a s i c s t r u c t u r e o f a n e c o n o m y w h i c h i s a l w a y s p r e s e n t d e p e n d i n g o n t h e s i z e o f i t s e c o n o m y . H o w e v e r , t h e r e h a s b e e n l i t t l e e f f o r t t o s u p p o r t o r r e f u t e t h i s h y p o t h e s i s .

J e n s e n et al. ( 1 9 8 8 ) d e m o n s t r a t e d t h a t l a r g e c o m p o n e n t s o f r e g i o n a l e c o n o m i e s a r e m o r e s i m i l a r r a t h e r t h a n d i f f e r e n t i n t h e i r e c o n o m i c s t r u c t u r e . F r o m t h i s r e s u l t , t h e y d e v e l o p e d a h y p o t h e s i s w h i c h i s t h e s o -c a l l e d f u n d a m e n t a l e c o n o m i c s t r u c t u r e h y p o t h e s i s . T h i s p a p e r t e s t s t h e s u p p o r t f o r t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e h y p o t h e s i s i n I n d o n e s i a . T o s o m e e x t e n t , o t h e r d i f f e r e n t f u n c t i o n a l f o r m s a r e t e s t e d t o s e e t h e b e s t f u n c t i o n a l f o r m t o c a p t u r e t h e I n d o n e s i a n s i t u a t i o n .

A l i m i t e d b u d g e t i s a m a j o r c o n s t r a i n t t o c o n s t r u c t o r u p d a t e a r e g i o n a l i n p u t - o u t p u t t a b l e , e s p e c i a l l y f o r d e v e l o p i n g c o u n t r i e s . T h e r e i s a n e e d f o r n e w k n o w l e d g e o f r e g i o n a l e c o n o m i c s t r u c t u r e m a i n l y t o p l a n e c o n o m i c d e v e l o p m e n t s t r a t e g i e s . H e n c e , a m e t h o d f o r c o n s t r u c t i n g h y b r i d t a b l e s a t l o w c o s t w i t h a c c e p t a b l e a c c u r a c y i s h i g h l y n e c e s s a r y . U n f o r t u n a t e l y , t h e u s e o f h y b r i d " G R I T - l i k e " m e t h o d s f o r c o n s t r u c t i n g r e g i o n a l i n p u t - o u t p u t t a b l e s i n I n d o n e s i a h a s n o t s o f a r b e e n f u l l y e x p l o i t e d i n s t u d y i n g r e g i o n a l e c o n o m i c s t r u c t u r e s .

2. THE FUNDAMENTAL E C O N O M I C STRUCTURE REVISITED

I n s p i r e d b y S i m p s o n a n d T s u k u i ' s p a p e r , J e n s e n , W e s t a n d H e w i n g s ( 1 9 8 8 ) d e v e l o p e d a h y p o t h e s i s t h a t t h e r e i s a b a s i c ( f u n d a m e n t a l ) s t r u c t u r e o f e c o n o m i e s . T h e c o n c e p t o f a b a s i c s t r u c t u r e o f e c o n o m i e s i n t h e F E S h y p o t h e s i s i s d i f f e r e n t f r o m t h e c o n c e p t o f e c o n o m i c b a s e t h e o r y . I n t h e e c o n o m i c b a s e t h e o r y , t h e b a s i c s t r u c t u r e s o f t h e e c o n o m y a r e t h e s e c t o r s t h a t p r o v i d e g r o w t h s t i m u l i f r o m e x t e r n a l s o u r c e s l i k e e x p o r t s o r t r a n s f e r p a y m e n t s t o t h e r e g i o n . T h e s e s e c t o r s a r e s o - c a l l e d b a s i c s e c t o r s . T h e r e f o r e , t h e b a s i c s e c t o r s a r e t h e s e c t o r s t h a t r e l y u p o n d e m a n d o u t s i d e o f t h e r e g i o n a n d t h e f l o w o f m o n e y t o t h e r e g i o n d u e t o e x p o r t s o r t r a n s f e r p a y m e n t s . O n t h e o t h e r h a n d , t h e b a s i c s t r u c t u r e o f t h e F E S c o n c e p t i s t h e s e c t o r s t h a t r e l y o n i n t e r n a l f a c t o r s s u c h a s e c o n o m i c a c t i v i t y o r p o p u l a t i o n . H o w e v e r , t h e r e a r e s i m i l a r i t i e s b e t w e e n t h e s e t w o c o n c e p t s . T h e F E S c o n c e p t i s t h a t t h e c o m m o n f e a t u r e s o f a n e c o n o m y w i l l b e s i m i l a r f o r s i m i l a r r e g i o n s o f e c o n o m i c s i z e . I n o t h e r w o r d s , a r e g i o n h a s a s i m i l a r m i n i m u m r e q u i r e m e n t o f f u n d a m e n t a l e c o n o m i c s t r u c t u r e t o s u p p o r t i t s e c o n o m i c a c t i v i t i e s a n d p o p u l a t i o n t o o t h e r r e g i o n s o f s i m i l a r s i z e . T h e r e f o r e , t h i s c o n c e p t i s s i m i l a r t o t h e m i n i m u m r e q u i r e m e n t a p p r o a c h i n d e t e r m i n i n g e c o n o m i c b a s e ( U U m a n & D a c e y ,

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1 9 6 0 ) . U l l m a n a n d D a c e y ' s s t u d y p r o v i d e d t h e p r o c e d u r e f o r c a l c u l a t i o n o f u r b a n e m p l o y m e n t s t r u c t u r e . T h e m i n i m u m r e q u i r e m e n t t e c h n i q u e c a n b e u s e d t o p r o v i d e a n a p p r o x i m a t i o n o f t h e p e r c e n t a g e o f t h e l a b o u r f o r c e n e e d e d t o s u p p o r t t h e i n t e r n a l e c o n o m i c a c t i v i t i e s o f a c i t y . B y t h e s a m e a n a l o g y , t h e e x i s t e n c e o f F E S s e c t o r s i n a r e g i o n r e l i e s o n t h e s i z e o f t h e r e g i o n a l e c o n o m y . I n o t h e r w o r d s , m o s t o f t h e F E S s e c t o r s a r e u r b a n o r i e n t e d a c t i v i t i e s .

J e n s e n ( 1 9 8 1 ) s u g g e s t e d t h a t t h e r e a r e t w o t y p e s o f r e a c t i o n p a t h s o f g r o w t h o r d e c l i n e , t h e e x t e r n a l l y o r i e n t e d p a t h w h i c h h a s i t s o r i g i n o u t s i d e t h e r e g i o n a n d t h e i n t e r n a l l y o r i e n t e d p a t h t h a t h a s i t s o r i g i n w i t h i n t h e r e g i o n i n q u e s t i o n . T h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e a c t i v i t i e s i n c r e a s e d u e t o i m p u l s e s f r o m w i t h i n t h e r e g i o n , m e a n w h i l e t h e n o n f u n d a m e n t a l e c o n o m i c s t r u c t u r e i n c r e a s e s d u e t o i m p u l s e s f r o m o u t s i d e t h e r e g i o n ( J e n s e n et al. 1 9 9 1 ) .

T h e i n i t i a l a p p r o a c h s u g g e s t e d t o i d e n t i f y t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e i s c a l l e d t h e p a r t i t i o n e d a p p r o a c h . T h i s a p p r o a c h e x a m i n e s w h e t h e r a n y r e l a t i o n s h i p e x i s t s b e t w e e n e c o n o m i c i n d i c a t o r s a n d e c o n o m i c s t r u c t u r e .

2 .1 . The Partitioned Approach of Fundamental Economic Structure

J e n s e n et al. ( 1 9 8 8 ) p r o v i d e d a r e s e a r c h d i r e c t i o n o n i n p u t - o u t p u t a n a l y s i s u s i n g a s e t o f i n p u t - o u t p u t t a b l e s t o i d e n t i f y s o m e r e g u l a r i t i e s o f e c o n o m i c s t r u c t u r e . I n a d d i t i o n , b a s e d o n s e v e r a l s t u d i e s , J e n s e n et al. p r o p o s e d a p r o v o c a t i v e h y p o t h e s i s . T h e h y p o t h e s i s i s t h a t m o s t o f t h e e c o n o m i c s t r u c t u r e i s m o r e s i m i l a r r a t h e r t h a n d i f f e r e n t . T h i s a r g u m e n t c o n f l i c t s w i t h t h e c u r r e n t a s s u m p t i o n t h a t m o s t o f t h e e c o n o m i c s t r u c t u r e i s d i f f e r e n t a n d u n i q u e . T h e r e f o r e , i t i s d i f f i c u l t t o m a k e c l a s s i f i c a t i o n s o r g r o u p i n g s o f e c o n o m i e s . F a c i n g t h e s e d i f f i c u l t i e s , J e n s e n et al. ( 1 9 8 8 ) s u g g e s t e d t h a t t h e F E S c a n b e u s e d a s a f o u n d a t i o n o f e c o n o m i c t a x o n o m y .

J e n s e n , W e s t a n d H e w i n g s ( 1 9 8 8 ) d e v e l o p e d t h e F E S h y p o t h e s i s f r a m e w o r k a f t e r o b s e r v i n g r e g i o n a l i n p u t - o u t p u t t a b l e s i n A u s t r a l i a . C o m p a r e d t o S i m p s o n a n d T s u k u i ' s a r t i c l e , t h e c o n c e p t o f t h e F E S i s s l i g h t l y d i f f e r e n t . I n J e n s e n et al's s t u d y , r e g i o n a l i n p u t - o u t p u t t a b l e s r e p r e s e n t t h e r e g i o n a l r e q u i r e m e n t ' s m a t r i x . T h i s m a t r i x e x c l u d e s i m p o r t c o n t e n t i n t h e p r o d u c t i o n s y s t e m . T h e r e f o r e , t h e i n p u t - o u t p u t t a b l e s r e p r e s e n t t h e l o c a l r e s o u r c e s u s e d o n l y . T h i s m e a n s t h a t t h e i n t e r m e d i a t e m a t r i x o f t h e i n p u t - o u t p u t t a b l e v a r i e s g r e a t l y d e p e n d i n g u p o n t h e r e s o u r c e e n d o w m e n t f o r p r i m a r y a n d m a n u f a c t u r i n g r e l a t e d t o p r i m a r y s e c t o r s . H o w e v e r , s o m e m a n u f a c t u r i n g s e c t o r s a n d s e r v i c e s e c t o r s m a y b e l e s s d i f f e r e n t o r e v e n m a r k e d l y s i m i l a r a c r o s s r e g i o n s i f t h e e c o n o m i c

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s i z e i s t h e s a m e . C o n v e r s e l y , S i m p s o n a n d T s u k u i ' s a p p r o a c h w a s b a s e d o n t h e c o e f f i c i e n t t e c h n o l o g y m a t r i x w h i c h d i s r e g a r d s t h e s o u r c e o f i n p u t . T h e r e f o r e , t h e d i f f e r e n c e i s i n t h e t r e a t m e n t o f t h e i m p o r t c o m p o n e n t i n t h e i n p u t - o u t p u t t a b l e s . H o w e v e r , t h e r e s u l t s a r e s i m i l a r f o r m o s t o f t h e s e c o n d a r y a n d t e r t i a r y s e c t o r w h i c h h a v e s i m i l a r p r o d u c t i o n s t r u c t u r e s .

T o s o m e e x t e n t , t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( F E S ) c o n c e p t d e v e l o p e d b y J e n s e n , H e w i n g s , a n d W e s t ( 1 9 8 8 ) i s a w i d e r c o n c e p t c o m p a r e d w i t h t h e p r e v i o u s s t u d i e s . T h e F E S c o n c e p t a l s o c o v e r s h o u s e h o l d c o n s u m p t i o n a s a p a r t o f t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e .

H e w i n g s , S o n i s a n d J e n s e n ( 1 9 8 8 ) s u g g e s t t h a t t h e F E S c o n c e p t c a n b e b r o k e n i n t o t h r e e m a i n c h a r a c t e r i s t i c s : ( i ) s t a b i l i t y ; ( i i ) p r e d i c t a b i l i t y ; a n d ( i i i ) i m p o r t a n c e . T h e s t a b i l i t y o f t h e F E S r e f e r s t o t h e p r o p o r t i o n w h i c h a c e r t a i n p a r t o f e c o n o m i c s t r u c t u r e e x i s t s a c r o s s s u b s t a n t i a l s a m p l e s . I n o t h e r w o r d s , t h e p r o p o r t i o n o f t h e F E S i n t h e r e g i o n a l e c o n o m y r e m a i n s s u b s t a n t i a l t h e s a m e a c r o s s e c o n o m i e s . T h e p r e d i c t a b i l i t y o f t h e F E S m e a n s t h a t t h e p o r t i o n o f t h e F E S p r e s e n t a t a c e r t a i n l e v e l d e p e n d s u p o n a g g r e g a t e e c o n o m i c m e a s u r e m e n t s s u c h a s t h e g r o s s r e g i o n a l p r o d u c t . T h e r e f o r e , a p o r t i o n o f t h e F E S c a n b e p r e d i c t e d b a s e d o n s o m e a g g r e g a t e e c o n o m i c i n d i c a t o r s . T h e i m p o r t a n c e o f t h e F E S i n d i c a t e s t h a t t h e c o m p o n e n t o f t h e F E S w h i c h i s a p a r t o f r e g i o n a l e c o n o m i c s t r u c t u r e m a y b e c o n s i d e r e d a s i g n i f i c a n t p a r t o f t h e w h o l e s y s t e m . T h i s m e a n s t h a t t h e c h a n g e i n t h e F E S w o u l d l i k e l y r e s u l t i n a p r o f o u n d c h a n g e i n t h e w h o l e s y s t e m . T h i s s u g g e s t s t h a t t h e F E S p l a y s a n i m p o r t a n t r o l e i n t h e r e g i o n a l e c o n o m i c s t r u c t u r e .

T h e F E S c a n b e e s t i m a t e d d e p e n d i n g u p o n t h e e c o n o m y ' s s i z e . T h e s e c t o r s o f t h e F E S a l w a y s e x i s t i n e c o n o m i e s o f s i m i l a r s i z e a n d s i m i l a r e c o n o m i c e n v i r o n m e n t , b e c a u s e t h e s e s e c t o r s h a v e a r e l a t i o n s h i p w i t h t h e e c o n o m i c s i z e w h i c h i s r e p r e s e n t e d b y a g g r e g a t e e c o n o m i c i n d i c a t o r s . T h e s e s e c t o r s , s o - c a l l e d p e o p l e o r i e n t e d a c t i v i t i e s , c o v e r e v e r y t h i n g f r o m m a n u f a c t u r i n g t o s e r v i c e s e c t o r s . C o n v e r s e l y , t h e n o n - f u n d a m e n t a l e c o n o m i c s t r u c t u r e c o m p r i s e s s e c t o r s w h i c h c a n n o t b e p r e d i c t e d w i t h s o m e c e r t a i n a g g r e g a t e e c o n o m i c i n d i c a t o r s . T h e s e s e c t o r s u s u a l l y r e l a t e t o g e o g r a p h i c a l l y o r i e n t e d a c t i v i t i e s s u c h a s a g r i c u l t u r e a n d m i n i n g . J e n s e n ( 1 9 8 1 ) a r g u e s t h a t s o m e e c o n o m i c a c t i v i t i e s c a n b e c a t e g o r i s e d i n t o t h r e e c a t e g o r i e s , i . e . u r b a n o r i e n t e d a c t i v i t i e s , g e o g r a p h i c a l l y o r i e n t e d a c t i v i t i e s a n d c o m p l e m e n t a r y a c t i v i t i e s . U r b a n o r i e n t e d a c t i v i t i e s a r e e c o n o m i c a c t i v i t i e s t h a t r e l a t e t o t h e p o p u l a t i o n s u c h a s m a n u f a c t u r i n g a n d s e r v i c e s . O b v i o u s l y , t h e s e a c t i v i t i e s g r o w a s t h e p o p u l a t i o n i n c r e a s e s . C o m p l e m e n t a r y a c t i v i t i e s a r e e c o n o m i c a c t i v i t i e s t h a t s u p p o r t b o t h u r b a n a n d g e o g r a p h i c a l a c t i v i t i e s .

W e s t a n d J e n s e n ( 1 9 8 7 ) a l s o n o t e d t h a t t h e r e i s a p a t t e r n o f e c o n o m i c s t r u c t u r e . U s i n g Q u e e n s l a n d i n p u t - o u t p u t t a b l e s , t h e y

1 2 6


i d e n t i f i e d t h a t t h e r e a r e s o m e c h a r a c t e r i s t i c s o f e c o n o m i c s t r u c t u r e s w h i c h e x i s t a t p r e d i c t a b l e l e v e l s i n a l l t y p e s o f r e g i o n a l e c o n o m i e s .

J e n s e n , W e s t , a n d H e w i n g s ( 1 9 8 8 ) f o u n d t h a t m a n y c e l l s i n t h e Q u e e n s l a n d r e g i o n a l i n p u t - o u t p u t t a b l e s a r e p r e d i c t a b l e . T h e s e c e l l s a r e t h e s o - c a l l e d f u n d a m e n t a l e c o n o m i c s t r u c t u r e . T h e y m e a s u r e d t h e r e l a t i o n s h i p b e t w e e n e a c h c e l l i n t h e i n p u t - o u t p u t t a b l e s a n d t o t a l r e g i o n a l g r o s s o u t p u t o r t o t a l v a l u e a d d e d f o r t h e Q u e e n s l a n d r e g i o n b y u s i n g r e g r e s s i o n a n a l y s i s . T h e r e g r e s s i o n e q u a t i o n t h a t t h e y u s e d i s a s f o l l o w s :

W h e r e

r = 1 m

i j = l . . . . k .

T j j ( r ) = c e l l t r a n s a c t i o n s e n t r y f o r t h e r t h r e g i o n .

X ( r ) = t h e i n d e p e n d e n t v a r i a b l e f o r t h e r t h r e g i o n ( t o t a l g r o s s o u t p u t / t o t a l v a l u e a d d e d ) .

m = n u m b e r o f r e g i o n s . j k = l e v e l o f a g g r e g a t i o n o f s e c t o r s .

T h e t h e o r e t i c a l g r o u n d s o f t h e i r a n a l y s i s e v a l u a t e s w h e t h e r t h e r e i s a n y r e l a t i o n s h i p b e t w e e n t r a n s a c t i o n p a t t e r n s a n d t o t a l r e g i o n a l e c o n o m i c i n d i c a t o r s . T h e e c o n o m i c i n d i c a t o r s a r e r e p r e s e n t e d b y t o t a l r e g i o n a l g r o s s o u t p u t a n d t o t a l v a l u e a d d e d . T h e t r a n s a c t i o n c e l l s r e p r e s e n t i n t e r a c t i o n s o f t h e p r o d u c t i o n s t r u c t u r e i n t h e r e g i o n a l e c o n o m y .

J e n s e n et al. ( 1 9 9 1 ) e x t e n d e d t h e s t u d y w i t h i n p u t - o u t p u t t a b l e s a c r o s s A u s t r a l i a a n d f o u n d a s i m i l a r r e s u l t t h a t m a n y c e l l s o f i n p u t -o u t p u t t a b l e s c o r r e l a t e w i t h t h e t o t a l g r o s s o u t p u t . E v e n t h o u g h , s o m e o f t h e r e s u l t s d i d n o t p r o v i d e a s t r o n g r e l a t i o n s h i p , r e p r e s e n t e d b y t h e s m a l l c o r r e l a t i o n c o e f f i c i e n t , t h e s t a t i s t i c a l t e s t s w e r e s i g n i f i c a n t .

T h e d r a w b a c k o f t h e p a r t i t i o n e d a p p r o a c h i s t h a t i t r e q u i r e s a p o o l o f i n p u t - o u t p u t t a b l e s t o e s t i m a t e t h e F E S . A n o t h e r p r o b l e m m a y e m e r g e c o n c e r n i n g i n t e r p r e t a t i o n i f t h e r e i s a n o u t l i e r c a s e i n t h e r e g r e s s i o n c o e f f i c i e n t . T h e r e f o r e , J e n s e n et al. ( 1 9 9 1 ) s u g g e s t e d a n o t h e r a p p r o a c h t o s t u d y f u n d a m e n t a l e c o n o m i c s t r u c t u r e w h i c h i s t h e s o - c a l l e d t i e r e d a p p r o a c h .

( 1 )

( 2 )

1 2 7

M. Handry Imansyah; Guy R. West; Rodney C. jensen

2.2. The Tiered Approach of Fundamental Economic Structure

J e n s e n et al. ( 1 9 9 1 ) c o n t i n u e d t h e s t u d y o f r e g i o n a l e c o n o m i c s t r u c t u r e a n d p r o p o s e d a t i e r e d a p p r o a c h t o i d e n t i f y t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e . T h e t i e r e d a p p r o a c h i s b a s e d o n t h e a s s u m p t i o n t h a t a n i n p u t -o u t p u t t a b l e i s t h e s u m o f t w o t a b l e s w h i c h c o n s i s t o f t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( F E S ) t a b l e a n d t h e n o n - f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( N F E S ) t a b l e .

F i g u r e 1 Tiered Representation of Input-Output Structure

+

R e g i o n a l I n p u t F u n d a m e n t a E c o n o m i c N o n F u n d a m e n t a l O u t p u t T a b l e S t r u c t u r e E c o n o m i c S t r u c t u r e

S o u r c e : J e r w e n et. al ( 1 9 9 1 ) : F i g u r e 1 .

I n m a t r i x e q u a t i o n , t h e t i e r e d a p p r o a c h c a n b e w r i t t e n a s f o l l o w s :

TijT = N F E S i j T + F E S i j T

W h e r e :

T j j r = e a c h c e l l o f t o t a l i n p u t - o u t p u t t a b l e i n r e g i o n r .

N F E S i | r = e a c h c e l l o f N F E S i n p u t - o u t p u t t a b l e i n r e g i o n r .

F E S i | r = e a c h c e l l o f F E S i n p u t - o u t p u t t a b l e i n r e g i o n r .

T h i s a p p r o a c h h a s a k e y a d v a n t a g e c o m p a r e d w i t h t h e p a r t i t i o n e d a p p r o a c h , b e c a u s e t h e t i e r e d a p p r o a c h d o e s n o t r e q u i r e a p o o l o f i n p u t -o u t p u t t a b l e s . T h e t i e r e d a p p r o a c h a s s u m e s t h a t h o u s e h o l d c o n s u m p t i o n i s p a r t o f t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e . T h i s a s s u m p t i o n c a n b e j u s t i f i e d f r o m t h e p e r s p e c t i v e t h a t h o u s e h o l d c o n s u m p t i o n w i l l b e d e t e r m i n e d b y t h e s i z e o f t h e p o p u l a t i o n a n d t h e s i z e o f t h e p o p u l a t i o n a f f e c t s t h e e c o n o m i c a c t i v i t i e s i n a r e g i o n .

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3. DATA A N D M E T H O D O L O G Y

T h e d a t a u s e d i n t h i s p a p e r a r e f r o m t h e C e n t r e f o r R e s e a r c h a n d D e v e l o p m e n t o f M i n e r a l T e c h n o l o g y , D e p a r t m e n t o f M i n i n g a n d E n e r g y i n I n d o n e s i a . M o s t o f t h e t a b l e s a r e i n t h e s a m e b a s e y e a r ( 1 9 8 8 ) , b u t t h r e e o f t h e m a r e s l i g h t l y d i f f e r e n t ( t w o t a b l e s i n 1 9 8 5 b a s e y e a r a n d o n e t a b l e i n 1 9 8 3 b a s e y e a r ) . I n a d d i t i o n , t h r e e o f t h e t a b l e s h a v e d i f f e r e n t t r e a t m e n t f o r i m p o r t s . H e n c e , c o n s i s t e n c y w i t h o t h e r t a b l e s , a n a d j u s t m e n t i s m a d e b y u t i l i s i n g r e g i o n a l s u p p l y p e r c e n t a g e a s i t i s u s e d b y o t h e r t a b l e s .

S o m e s l i g h t l y d i f f e r e n t s e c t o r c l a s s i f i c a t i o n s e x i s t a m o n g t a b l e s . T h e r e f o r e , i f t h e s e c t o r s e x i s t a t l e a s t i n t h r e e r e g i o n a l t a b l e s , t h e s e c t o r s w e r e i n s e r t e d a s a b l a n k c o l u m n a n d r o w i n o t h e r t a b l e s t o p r e s e r v e c o n s i s t e n c y . I f t h e s e c t o r s e x i s t e d i n f e w e r t h a n t h r e e o f a l l r e g i o n a l t a b l e s , t h e s e c t o r s w e r e a g g r e g a t e d t o o t h e r s i m i l a r s e c t o r s . T h i s g i v e s 2 1 s e c t o r s i n e a c h t a b l e . S e c t o r a g g r e g a t i o n a n d s e c t o r c l a s s i f i c a t i o n c a n b e s e e n i n t h e A p p e n d i x t a b l e s .

T h e p a r t i t i o n e d a p p r o a c h d e v e l o p e d b y J e n s e n , W e s t a n d H e w i n g s ( 1 9 8 8 ) w i l l b e u s e d t o i d e n t i f y t h e r e g i o n a l e c o n o m i c s t r u c t u r e . R e g r e s s i o n a n a l y s i s w i l l b e u s e d t o i d e n t i f y t h e r e l a t i o n s h i p b e t w e e n t h e r e g i o n a l t r a n s a c t i o n ' s t a b l e a n d t h e s i z e o f t h e r e g i o n a l e c o n o m y w h i c h a r e r e p r e s e n t e d b y t o t a l s e c t o r a l g r o s s o u t p u t , t o t a l g r o s s r e g i o n a l d o m e s t i c p r o d u c t a n d p o p u l a t i o n .

T h e p r e v i o u s a p p r o a c h u s e d l i n e a r a n d d o u b l e l o g a r i t h m i c f u n c t i o n a l f o r m s . I n t h e c u r r e n t s t u d y , f i v e f u n c t i o n a l f o r m s a r e u s e d . T h e f u n c t i o n a l f o r m s a r e a s f o l l o w s :

T h e l i n e a r f u n c t i o n a l f o r m e q u a t i o n ( M o d e l A ) :

Xij = a + /^X(r) ( 4 )

T h e l i n e a r l o g a r i t h m i c f u n c t i o n a l f o r m e q u a t i o n ( M o d e l B ) :

Xij = a + j 3 \ o g X ( r ) (5)

T h e l o g a r i t h m i c l i n e a r f u n c t i o n a l f o r m e q u a t i o n ( M o d e l C ) :

\ogXij = a + j 3 X y { r ) . ( 6 )

T h e d o u b l e l o g a r i t h m i c f u n c t i o n a l f o r m e q u a t i o n ( M o d e l D ) :

l o g Xij = a-\- l o g fiXij{r) ( 7 )

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M. Handry Imansyah; Guy R. West; Rodney C. Jensen

T h e q u a d r a t i c f u n c t i o n a l f o r m e q u a t i o n ( M o d e l E ) :

Xy = a + fiiXir) + ^ 2 X \ r ) (g)

W h e r e :

X i j ( r ) = t h e t r a n s a c t i o n s e n t r y f r o m t h e r t h r e g i o n .

X ( r ) = t h e i n d e p e n d e n t v a r i a b l e f o r t h e r t h r e g i o n ( t o t a l s e c t o r a l g r o s s o u t p u t , o r p o p u l a t i o n o r t o t a l g r o s s d o m e s t i c r e g i o n a l p r o d u c t )

m = t h e n u m b e r o f r e g i o n s .

k = t h e l e v e l o f a g g r e g a t i o n / n u m b e r o f s e c t o r s .

r = l . . . m

i , j = l . . . k .

I f t h e o b s e r v a t i o n s a r e l e s s t h a n o r e q u a l t o t h r e e , t h e c a l c u l a t i o n w a s n o t c a r r i e d o u t . I f t h e r e w e r e a n y z e r o t r a n s a c h o n i n t h e s a m p l e s , t h i s v a l u e w a s r e p l a c e d b y a v e r y s m a l l v a l u e i n o r d e r t o a l l o w c a l c u l a t i o n i n l o g a r i t h m i c f o r m . B a s e d o n t h e s e a s s u m p t i o n s , t h e n u m b e r o f z e r o t r a n s a c t i o n s i n c l u d i n g a n u m b e r o f o b s e r v a t i o n s t h a t a r e l e s s t h a n o r e q u a l t o t h r e e a r e 1 9 4 c e l l s . T h e r e f o r e , t h e c a l c u l a t e d c e l l s a r e 2 9 0 c e l l s i n c l u d i n g t h e h o u s e h o l d s e c t o r .

I f t h e o b s e r v a t i o n s a r e l e s s t h a n o r e q u a l t o t h r e e , t h e c a l c u l a t i o n w a s n o t c a r r i e d o u t . I f t h e r e w e r e a n y z e r o t r a n s a c t i o n s i n t h e s a m p l e s , t h i s v a l u e w a s b e r e p l a c e d b y a v e r y s m a l l v a l u e i n o r d e r t o a l l o w c a l c u l a t i o n i n l o g a r i t h m i c f o r m . B a s e d o n t h e s e a s s u m p t i o n s , t h e n u m b e r o f z e r o t r a n s a c t i o n s , i n c l u d i n g a n u m b e r o f o b s e r v a t i o n s t h a t a r e l e s s t h a n o r e q u a l t o t h r e e , a r e 1 9 4 c e l l s . T h e r e f o r e , t h e c a l c u l a t e d c e l l s a r e 2 9 0 c e l l s i n c l u d i n g t h e h o u s e h o l d s e c t o r .

4. RESULTS A N D DISCUSSION

T h e r e a r e f i v e f u n c t i o n a l f o r m s u s e d t o i d e n t i f y f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( F E S ) . T h e q u a d r a t i c m o d e l a n d l i n e a r m o d e l h a v e t h e h i g h e s t p r o p o r t i o n o f s i g n i f i c a n t c e l l s c o m p a r e d t o o t h e r m o d e l s . M e a n w h i l e , t h e e c o n o m i c i n d i c a t o r t h a t h a s t h e h i g h e s t p r o p o r t i o n o f s i g n i f i c a n t c e l l s i s t h e t o t a l s e c t o r a l g r o s s o u t p u t c o m p a r e d t o o t h e r i n d i c a t o r s , s u c h a s g r o s s d o m e s t i c r e g i o n a l p r o d u c t a n d p o p u l a t i o n . T h e n u m b e r o f s i g n i f i c a n t c e l l s i s 7 3 % o f t h e t o t a l c e l l s i n c l u d i n g t h e h o u s e h o l d f o r t o t a l s e c t o r a l g r o s s o u t p u t i n t h e q u a d r a t i c m o d e l a t t h e 9 0 p e r c e n t c o n f i d e n c e l e v e l .

1 3 0


T a b l e 1 Percentage of significant cells at 10% level among models

based on three indicators (GDRP, POPULATION, TSGO)

Functional Form GDRP POPULATION TSGO

•i-HH w/oHH +HH w/oHH +HH w/oHH

A (Linear) 58 .97% 56 .25% 63 .92% 6 2 . 1 1 % 69 .07% 66 .79%

B (Linear logarithmic)

6 1 . 5 1 % 58 .98% 63 .92% 54 .30% 61 .86% 52 .58%

C (Logarithmic linear)

43 .10% 4 0 . 6 3 % 46 .55% 42 .97% 51 .72% 48 .44%

D (Double logarithmic)

55 .52% 53 .12% 54 .14% 51 .56% 61 .82% 59 .77%

E (Quadratic) 69 .42% 67 .19% 56.01 % 53 .13% 73 .80% 72 .66%

N o t e : + H H = H o u s e h o l d t o b e i n c l u d e d . W / o H H = w i t h o u t H o u s e h o l d .

T h e l e a s t i m p r e s s i v e m o d e l i s m o d e l C ( l o g a r i t h m i c l i n e a r ) f o l l o w e d b y m o d e l D ( d o u b l e l o g a r i t h m i c ) . I n m o s t c a s e s , t h e s e m o d e l s h a v e l e s s t h a n 6 0 % o f s i g n i f i c a n t c e l l s i n c l u d i n g t h e h o u s e h o l d s e c t o r . T h e r e s u l t a l s o s h o w s t h a t h o u s e h o l d s h a v e a n i m p o r t a n t r o l e , b e c a u s e i f h o u s e h o l d a r e i n c l u d e d , t h e n u m b e r o f s i g n i f i c a n t c e l l s i n c r e a s e s . T h e p r o p o r t i o n s o f s i g n i f i c a n t c e l l s i n t h e h o u s e h o l d c o l u m n a n d r o w a r e m o r e t h a n 6 0 % o f t h e h o u s e h o l d t o t a l s i n t h e c o l u m n a n d r o w . T a b l e 2 s h o w s t h a t m o s t o f t h e p r o p o r t i o n a r e g r e a t e r t h a n 7 0 % e x c e p t o n e i n m o d e l C f o r G D R P i n d i c a t o r . T h i s m e a n s t h a t a h o u s e h o l d p l a y s a n i m p o r t a n t r o l e i n t h e r e g i o n a l e c o n o m y , e s p e c i a l l y f o r d e v e l o p i n g c o u n t r i e s l i k e I n d o n e s i a . I n A u s t r a l i a , h o u s e h o l d i s a l s o a p a r t o f f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( J e n s e n , W e s t , a n d H e w i n g s ; 1 9 8 8 ) .

G e n e r a l l y , t h e p a t t e r n o f s i g n i f i c a n t c e l l s i s v e r y s i m i l a r f o r a l l t a b l e s a t t h e 9 0 p e r c e n t c o n f i d e n c e l e v e l s ( s e e F i g u r e 2 , 3 , 4 ) . T h e m a i n d i f f e r e n c e i s o n l y i n t h e p r o p o r t i o n . T h e s i g n i f i c a n t c e l l s l i e o n t h e i n t e r a c t i o n a m o n g s e c o n d a r y a n d t e r t i a r y s e c t o r s a n d , t o s o m e l e s s e r e x t e n t , s o m e a r e i n t h e p r i m a r y s e c t o r s .

M o s t o f t h e i n t e r a c t i o n c e l l s i n t h e i n p u t - o u t p u t t a b l e s a r e i n t h e s e c o n d a r y a n d t e r t i a r y s e c t o r s , a n d s o m e i n t h e p r i m a r y s e c t o r s u s i n g d i f f e r e n t t y p e s o f m o d e l s . T h i s i n d i c a t e s t h a t t h e s e f i n d i n g s s u p p o r t a n d a r e c o n s i s t e n t w i t h t h e f i n d i n g s o f J e n s e n et. al. ( 1 9 8 8 ) a n d W e s t h u i z e n ( 1 9 9 2 ) i n w h i c h m o s t o f t h e t r a n s a c t i o n c e l l s a r e r e l a t e d t o t h e e c o n o m i c a c t i v i t i e s i n t h e s e c o n d a r y a n d t e r t i a r y s e c t o r s . '

1 3 1

M . H a n d r y I m a n s y a h ; G u y R . W e s t ; R o d n e y C . j e n s e n

F i g u r e 2 Confidence level of significant cells for G D R P

1 3 2


Figure 4 C o n f i d e n c e l e v e l o f s i g n i f i c a n t c e l l s f o r T S G O

1

T h i s i n d i c a t e s t h a t t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e ( F E S ) h a s a s i m i l a r p a t t e r n w i t h t h a t o f d e v e l o p e d c o u n t r i e s l i k e A u s t r a l i a i n w h i c h m o s t o f t h e i n t e r a c t i o n i s i n t h e s e c o n d a r y a n d t e r t i a r y s e c t o r s . U n l i k e A u s t r a l i a w h i c h h a s a h i g h p r o p o r t i o n o f i n t e r a c t i o n i n s e c o n d a r y a n d t e r t i a r y s e c t o r s , I n d o n e s i a n o t o n l y h a s s i g n i f i c a n t c e l l s i n t h e s e c o n d a r y a n d t e r t i a r y s e c t o r s , b u t s o m e i n t h e p r i m a r y s e c t o r s a s w e l l . T h e r e a r e s o m e p o s s i b l e e x p l a n a t i o n s f o r w h y p r i m a r y s e c t o r s a r e p a r t o f a f u n d a m e n t a l e c o n o m i c s e c t o r . T h e p o s s i b i l i t i e s a r e a s f o l l o w s :

I

1 . S u b s i s t e n c e a g r i c u l t u r e s t i l l p r e v a i l s i n t h e I n d o n e s i a n r e g i o n a l e c o n o m y .

2 . T h e p o l i c y o f t h e C e n t r a l G o v e r n m e n t i s t o a c h i e v e s e l f s u f f i c i e n c y i n f o o d p r o d u c t i o n a t t h e r e g i o n a l l e v e l . T h e r e f o r e , t h e s e s e c t o r s a l s o i n c r e a s e a s t h e e c o n o m i c a c t i v i t y o r p o p u l a t i o n i n c r e a s e .

3. I n f r a s t r u c t u r e i s s t i l l l i m i t e d a n d n a t u r e i s l a n d e c o n o m i e s o c c u r , t h e r e f o r e t r a n s p o r t a t i o n c o s t b e c o m e s a m a j o r b a r r i e r t o i n t e r r e g i o n a l t r a d e . T h i s i s a n i n c e n t i v e f o r a r e g i o n t o b e c o m e s e l f - s u f f i c i e n t .

1 3 3


H i l l a n d W e i d e m a n ( 1 9 9 1 ) f o u n d t h a t s p e c i a l i z a t i o n d u e t o c o m p a r a t i v e a d v a n t a g e a n d t r a d e d i d n o t o c c u r i n t h e I n d o n e s i a n r e g i o n a l e c o n o m i e s s i n c e 1 9 7 0 t o t h e m i d - 1 9 8 0 ' s , b e c a u s e C e n t r a l G o v e r n m e n t p o l i c y w a s t o a c h i e v e s e l f s u f f i c i e n c y i n f o o d p r o d u c t i o n , e s p e c i a l l y w i t h r i c e . T h e y a l s o n o t e d t h a t n o n - r i c e f o o d c r o p s a p p e a r t o h a v e b e e n n e g l e c t e d a t t h e e x p e n s e o f r i c e i n S o u t h S u l a w e s i , e v e n t h o u g h t h e p r o v i n c e e v i d e n t l y h a s a s t r o n g c o m p a r a t i v e a d v a n t a g e i n t h e f o r m e r . H o w e v e r , R i a u a n d J a m b i P r o v i n c e h a v e a c h i e v e d s e l f s u f f i c i e n c y i n r i c e , e v e n t h o u g h t h e i r p h y s i c a l c o n d i t i o n s a r e b e t t e r s u i t e d t o c a s h c r o p s .

T h e q u a d r a t i c m o d e l g i v e s t h e h i g h e s t p r o p o r t i o n o f s t a t i s t i c a l l y s i g n i f i c a n t c e l l s f o r a l l i n d i c a t o r s . T h e r e s u l t s o f t h e q u a d r a t i c m o d e l s u g g e s t e d t h a t a n i n c r e a s e i n e c o n o m i c a c t i v i t y r e q u i r e s a h i g h e r p r o p o r t i o n o f i n p u t u s a g e . H o w e v e r , J a c k s o n ( 1 9 8 9 ) e x p l a i n e d t h i s p h e n o m e n o n b y i n d i c a t i n g t h e p o s s i b i l i t y o f a n o n l i n e a r r e l a t i o n s h i p b e t w e e n i n p u t a n d o u t p u t . S u c h r e l a t i o n s h i p s o c c u r b e c a u s e o f o v e r p r o d u c t i o n . D i s e c o n o m i e s o f s c a l e m i g h t o c c u r e s p e c i a l l y i n t e r t i a r y s e c t o r s b e c a u s e t h e g r o w t h o f p u r c h a s e o f i n p u t i s m u c h m o r e r a p i d t h a n t h e g r o w t h o f o u t p u t . A s t h e e c o n o m y g r o w s , t h e u s e o f i n p u t s i n c r e a s e d r a s t i c a l l y . T h i s m a y b e d u e t o a l i m i t e d i n f r a s t r u c t u r e a n d s e r v i c e s s e c t o r . I n d e v e l o p i n g c o u n t r i e s l i k e I n d o n e s i a , g e n e r a l l y i n f r a s t r u c t u r e a n d s e r v i c e s s e c t o r s a r e s t i l l l i m i t e d a n d u n d e r d e v e l o p e d .

T a b l e 2 Percentage of significant cells at 10% level among models based on three indicators

(GDRP, POPULATION, TSGO) in the household sectors only

Functional Form GDRP POPULATION TSGO

A (Linear) 7 9 . 4 1 % 7 9 . 4 1 % 88 .23%

B (Linear logarithmic) 82 .35% 82 .35% 7 9 . 4 1 %

C (Logarithmic linear) 61 .76% 73 .53% 76 .47%

D (Double logarithmic) 73 .53% 73 .53% 7 9 . 4 1 %

E (Quadratic) 88 .23% 7 9 . 4 1 % 82 .35%

N o t e : T h e r e a r e 4 2 c e l l s i n t h e h o u s e h o l d s e c t o r s ( c o l u m n a n d r o w ) , a n d 8 c e l l s w e r e n o t c a l c u l a t e d d u e t o z e r o t r a n s a c t i o n o r o b s e r v a t i o n w h i c h e q u a l o r l e s s t h a n t h r e e .

A m o n g m o d e l s , t h e q u a d r a t i c m o d e l ( m o d e l E ) g i v e s t h e h i g h e s t p r o p o r t i o n i n t e r m s o f t h e h i g h e s t a d j u s t e d R ^ i f w e m a k e o n e t a b l e ( s e e T a b l e 3). F o r G r o s s D o m e s t i c R e g i o n a l P r o d u c t ( G D R P ) , t h e c o m p o s i t i o n s o f t h e b e s t m o d e l b a s e d o n t h e h i g h e s t a d j u s t e d R ^ a r e a s

134

T h e F u n d a m e n t a l E c o n o m i c S t r u c t u r e i n D e v e l o p i n g C o u n t r i e s :

f o l l o w s , 6 3 . 6 6 % , 1 5 , 5 6 % , a n d 1 5 , 1 6 % f o r q u a d r a t i c , l i n e a r l o g a r i t h m i c , a n d l o g a r i t h m i c l i n e a r , r e s p e c t i v e l y . M e a n w h i l e , d o u b l e l o g a r i t h m i c a n d l i n e a r m o d e l s a r e l e s s t h a n 5 % .

F r o m Table 3 , t h e p r o p o r t i o n o f c e l l s f o r t h e b e s t m o d e l s e l e c t e d i n o n e t a b l e i s b a s e d o n t h e h i g h e s t a d j u s t e d t h a t a r e s i g n i f i c a n t a t t h e 1 0 % l e v e l a r e 8 4 . 4 6 % , 6 6 . 4 3 % a n d 5 2 . 7 9 % f o r t o t a l s e c t o r a l g r o s s o u t p u t , g r o s s d o m e s t i c r e g i o n a l p r o d u c t , a n d p o p u l a t i o n , r e s p e c t i v e l y .

T a b l e 3 Frequency distribution for the best fit model

based on the highest adjusted B)

Functional Form GDRP Population TSGO

A 2.16% 10.38% 10.78%

B 15.56% 14.48% 8.98%

C 15.16% 11.08% 12.08%

D 3.46% 0 .78% 2.48%

E 63 .66% 63 .28% 65 .68%

Total 100.00% 100.00% 100.00%

T h e i m p l i c a t i o n o f t h e s e r e s u l t s i s t h a t t h e F E S h y p o t h e s i s c a n b e u s e d t o c o n s t r u c t h y b r i d t a b l e s a s t h e f i r s t e s t i m a t i o n . I n i t i a l l y , i n t h e c o n s t r u c t i o n p r o c e s s , F E S s e c t o r s s u c h a s t e r t i a r y s e c t o r s c a n b e e s t i m a t e d u s i n g r e g r e s s i o n r e s u l t s . F o r t h i s c a s e , t h e b e s t m o d e l b a s e d o n t h e a d j u s t e d R ^ a t t h e h i g h e s t s i g n i f i c a n t l e v e l i s m o d e l E . T h e r e f o r e , m o d e l E w i l l b e u s e d t o e s t i m a t e t r a n s a c t i o n s o f t h e s e c o n d a r y a n d t e r t i a r y s e c t o r s a s t h e f i r s t a p p r o x i m a t i o n . M e a n w h i l e , f o r o t h e r s e c t o r s t h a t h a v e i n s i g n i f i c a n t c e l l s , t h e p r i m a r y a n d s e c o n d a r y d a t a w i l l b e u s e d t o c o n s t r u c t h y b r i d t a b l e s .

I n s u m m a r y , s u p e r i o r d a t a c a n b e c o n c e n t r a t e d i n t h e n o n f u n d a m e n t a l s t r u c t u r e s e c t o r s a n d t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e s e c t o r s c a n b e e s t i m a t e d u s i n g r e g r e s s i o n r e s u l t s o r o t h e r m e a s u r e s .

5. C O N C L U S I O N

T h i s p a p e r a t t e m p t s t o i d e n t i f y t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e i n I n d o n e s i a n r e g i o n a l e c o n o m i e s . H o w e v e r , t h e p a t t e r n i s s l i g h t l y d i f f e r e n t c o m p a r e d t o t h a t o f d e v e l o p e d c o u n t r i e s l i k e A u s t r a l i a . T h e f u n d a m e n t a l

1 3 5

M. Handry Imansyah; Guy R. West; Rodney C . jensen

e c o n o m i c s t r u c t u r e i s n o t j u s t c o n t a i n e d i n t h e s e c o n d a r y a n d t e r h a r y s e c t o r s , b u t i n t h e p r i m a r y s e c t o r s a s w e l l . T h i s r e s u l t i n d i c a t e s t h a t I n d o n e s i a i s s t i l l i n t h e e a r l y d e v e l o p m e n t s t a g e w i t h t h e e x i s t e n c e o f s o m e p r i m a r y s e c t o r s i n t h e p a r t o f f u n d a m e n t a l e c o n o m i c s t r u c t u r e . I n a d d i t i o n , t h e b e s t f u n c t i o n a l f o r m i s t h e q u a d r a t i c m o d e l i n t e r m s o f t h e h i g h e s t a d j u s t e d R ^ .

T h e i m p l i c a t i o n o f t h i s r e s e a r c h i s t h a t t h e c o n s t r u c t i o n o f h y b r i d t a b l e s c a n b e c o n c e n t r a t e d o n t h e n o n f u n d a m e n t a l e c o n o n v i c s t r u c t u r e u s i n g s u p e r i o r d a t a . M e a n w h i l e , t h e f u n d a m e n t a l e c o n o m i c s t r u c t u r e s e c t o r s c a n b e e s t i m a t e d u s i n g r e g r e s s i o n r e s u l t s o r o t h e r m e a s u r e s .

6. REFERENCES

C h e n e r y , H . B . a n d S y r q u i n , M . , 1 9 8 6 , " T y p i c a l P a t t e r n s o f T r a n s f o r m a t i o n " , i n C h e n e r y , H . B . , S y r q u i n , M a n d R o b i n s o n , S ( e d s ) . Industrialization and growth: a comparatives study. N e w Y o r k , O x f o r d U n i v e r s i t y P r e s s .

H a m i l t o n , J . R . J e n s e n , R . C . , 1 9 8 3 , S u m m a r y o f M e a s u r e s o f I n t e r c o n n e c t e d n e s s f o r I n p u t - O u t p u t M o d e l s , Environment and Planning A. V o l . 1 5 , p p . 5 5 - 6 5 .

H a r r i g a n , P . , M c G i l v r a y , J . , a n d M c N i c o U , 1 . , 1 9 8 0 , A C o m p a r i s o n o f R e g i o n a l a n d N a t i o n a l T e c h n i c a l S t r u c t u r e , The Economic Journal. D e c e m b e r , p p 7 9 5 - 8 1 0 .

H e w i n g s , G e o f f r e y J . D . , 1 9 8 3 , A D e c o m p o s i t i o n A p p r o a c h t o t h e A n a l y s i s o f C h a n g e s i n R e g i o n a l E c o n o m i c S t r u c t u r e , Modeling and Simulation, V o l . 1 4 , p p . 8 5 9 - 8 6 3 .

H e w i n g s , G . J . D . a n d R o m a n e s , M . C . , 1 9 8 1 , S i m u l a t i n g L e s s D e v e l o p e d R e g i o n U n d e r L i m i t e d I n f o r m a t i o n , Geographical Analysis, V o l 1 3 . N o . 4 , p p . 3 7 3 - 3 9 0 .

H e w i n g s , G . J . D . , J e n s e n , R . C . a n d W e s t , G . R . , 1 9 8 7 , Holistic Matrix Descriptor of Regional Input-Output Systems, W o r k i n g P a p e r s i n E c o n o m i c s N o . 6 0 , D e p a r t m e n t o f E c o n o m i c s , U n i v e r s i t y o f Q u e e n s l a n d .

H e w i n g s , G . J . D . , S o n i s , M . , a n d J e n s e n , R . C . , 1 9 8 8 , F i e l d o f I n f l u e n c e o f T e c h n o l o g i c a l C h a n g e i n I n p u t - O u t p u t M o d e l s , Papers of Regional Science Association,Vol. 6 4 , p p . 2 5 - 3 6 .

H i l l , H a l a n d W e i d e m a n , A ., 1 9 9 1 , " R e g i o n a l D e v e l o p m e n t i n I n d o n e s i a : P a t t e r n s a n d I s s u e s " , i n H a l H i l l ( e d ) . Unity and Diversity, Regional Economic Development in Indonesia since 1970. S i n g a p o r e , O x f o r d U n i v e r s i t y P r e s s .

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J a c k s o n , R . W . , 1 9 8 9 , P r o b a b i l i s t i c I n p u t - O u t p u t A n a l y s i s : M o d e l l i n g D i r e c t i o n s . Socio-Economic Planning Science, V o l 2 3 , N o . 1 - 2 , p p 8 7 -9 5 .

J a c k s o n , R . W . , R o g e r s o n , R . , P l a n e , D . , a n d O ' H u a l l a c h a i n , B . , 1 9 9 0 , A C a u s a t i v e M a t r i x A p p r o a c h t o I n t e r p r e t i n g S t r u c t u r a l C h a n g e , Economic Systems Research, V o l . 2 , N o . 3 , p p . 2 5 9 - 2 6 9 .

J e n s e n , R . C , 1 9 8 1 , " A M o d e l o f R e g i o n a l E c o n o m i c G r o w t h a n d D e c l i n e i n A g r i c u l t u r a l R e g i o n s " , i n W . C . B u h r a n d P . F r i e d e r i c h ( e d s ) . . Regional Development under Stagnation, N o m o s - V e r l a g s g e s e l l s c h a f t , B a d e n B a d e n .

J e n s e n , R . C , H e w i n g s , G . J . D . , S o n i s , M . , a n d W e s t , G . R . , 1 9 8 8 , O n T a x o n o m y o f E c o n o m i e s , Australian journal of Regional Studies, N o . 2 , p p 2 - 2 4 .

J e n s e n , R . C , D e w h u r s t , J . H . L . I . , W e s t , G . R . , a n d H e w i n g s , G . J . D . , 1 9 9 1 , " O n t h e C o n c e p t s o f F i m d a m e n t a l E c o n o m i c S t r u c t u r e " , i n D e w h u r s t , H e w i n g s a n d J e n s e n ( e d s ) . Regional Economic Modelling: New Developments and Interpretations, A v e b u r y , S y d n e y .

J e n s e n , R . C , W e s t , G . R . , a n d H e w i n g s , G . J . D . , 1 9 8 8 , T h e S t u d y o f R e g i o n a l E c o n o m i c S t r u c t u r e u s i n g I n p u t - o u t p u t T a b l e s , Regional Studies. V o l . 2 2 . N o . 3 , p p . 2 0 9 - 2 2 0 .

L e o n t i e f , W a s s i l y , 1 9 6 3 , S t r u c t u r e o f D e v e l o p m e n t , Scientific America, S e p t e m b e r , p p . 1 4 9 - 1 6 6 .

M i l l e r , R . E . a n d B l a i r , P . D . , 1 9 8 5 , Input-Output Analysis: Foundations and-Extension, E n g e l w o o d C l i f f s , N e w J e r s e y , P r e n t i c e H a l l .

S h a f f e r , R o n . , 1 9 8 9 , Community Economics: Economic Structures and Change in Smaller Communities, I o w a S t a t e U n i v e r s i t y P r e s s , A m e s .

S i m p s o n , D . , a n d T s u k u i , J . , 1 9 6 5 , T h e F u n d a m e n t a l S t r u c t u r e o f I n p u t -O u t p u t T a b l e s , A n I n t e r n a t i o n a l C o m p a r i s o n , The Review of Economics and Statistics,, 4 7 , p p . 4 3 4 - 4 4 6 .

S y r q u i n , M . , 1 9 8 8 , " P a t t e r n s o f S t r u c t u r a l C h a n g e , i n H . C h e n e r y a n d T . N . S r i n i v a s a n ( e d s ) . Handbook of Development Economics, V o l . 1 , N o r t h H o l l a n d .

U l l m a n , E . L . , a n d D a c e y , M . F . , 1 9 6 0 , T h e M i n i m u m R e q u i r e m e n t A p p r o a c h t o U r b a n E c o n o m i c B a s e , Papers and Proceedings of the Regional Science Association, 6 : 1 7 5 - 1 9 4 .

V a n D e r W e s t h u i z e n , J . M . , 1 9 9 2 , Towards Developing a Hybrid Method for Input-Output Table Compilation and Identifying a Fundamental Economic Structure (Regional Economics), P h . D . D i s s e r t a t i o n , U n i v e r s i t y o f P e n n s y l v a n i a .

1 3 7


W e s t G . R . , 1 9 8 1 a , A n E f f i c i e n t A p p r o a c h t o t h e E s t i m a t i o n o f R e g i o n a l I n p u t - o u t p u t M u l t i p l i e r s . Environment and Planning A. V o l 1 3 , p p . 8 5 7 - 8 6 7 .

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W e s t , G . R . , a n d J e n s e n , R . C . , 1 9 8 7 , Further Evidence to Support the Fundamental Economic Structure Hypothesis, P a p e r t o t h e 1 2 * A n n u a l C o n f e r e n c e A u s t r a l i a a n d N e w Z e a l a n d S e c t i o n R e g i o n a l S c i e n c e A s s o c i a t i o n , C e e l o n g , D e c e m b e r 1 9 8 7 . •

1 3 8


A p p e n d i x 1 S e c t o r s Classification

1 . Primary Sector 1 . Paddy

2. Other Food Crops

3. Other Agriculture

4. FIvestock

5 . Forestry

6. Fishery

7. Other Mining

8. Mineral Mining

9. Oil Mining

2. Secondary Sector 10. Food Manufacturing

1 1 . Mineral Manufacturing

12. Handicraft

13. Other Manufacturing

14. Oil and Gas Refinery

3. Tertiary Sector 15. Utilities

16. Construction

17. Trade

18. Restaurant and Hotel

19. Transportation and Communication

20. Financial Institution and Rent

2 1 . Services

139


A p p e n d i x 2 L i s f of Input-Output Regional Tables

No Province Year Source Number of sector

1 Ball 1985 Office of Development Mineral -T- L 1 1 ("i A." y"xZC*

Technology and Statistic Office

22

2 East Java 1988 Office of Development Mineral - T i l 1 ("A. A" A" A—A rr-


22

3 Irian Jaya 1988 Office of Development Mineral Technology and Statistic Office

22

4 Lampung 1988 Office of Development Mineral Technology and Statistic Office

22

5 Maluku 1988 Office of Development Mineral T L 1 1 *~A »• A- /~\ZZ'


22

6 South Sulawesi 1988 Office of Development Mineral Technology and Statistic Office

22

7 South Sumatera 1988 Office of Development Mineral leciuioiogy aiiu j iausi ic wi i ice

22

8 West Java 1983 Office of Development Mineral Technology and Statistic Office

22

9 West Nusa Tenggara

1988 Office of Development Mineral Technology and Statistic Office

22

10 Yogyakarta 1985 Office of Development Mineral Technology and Statistic Office

22

1 4 0

The Fundamental Economic Structure In Developing Countries:

A p p e n d i x 3 Sector classification before adjustment and aggregation for every province

Sector no.

w . i N u s a

lenggara Irian jaya Yogyakarta Maluku Ball Lampurrg South

Sulawesi South Sumatera

West Java East lava 1 1 r ( K i c i y racjoy raaoy rauuy raaay r aciay r auciy 0 . 4 4 . .

racicty raaay

Paddy -> 1 T lnx j r P/"LC\/4 Cr/'Atj

C J i n u r r o o Q crop C"1ll-iiir C r \ r \ A

uiner roou Crop

c/iner rooa Crop

uiner rooa Crop

/^t-r.AAl- CAAA-XAJ

CJiner rooa Crop

A-\»r.A. P A A U utner r ooci Crop

tjtner i oou Crop

m.t.Qr C . . . . 4 turner rooa Crop

r^tUA..• CAAAAAJ

rjiner rooa Crop

Other Food Crop

Other Agric. Other Agric. Other Agric. Other Agric. Utner Agric. Other Agric. Other Agric. Other Agric. rX»l - .A.- An. . lA.

utner Agric. Other Agric. 4 Livestock Livestock Livestock Livestock Livestock Livestock Livestock Livestock Livestock Livestock C

r) Forestry Forestry Forestry Forestry Forestry Forestry Forestry Forestry Forestry Forestry

6 Fishery Fishery Fishery Fishery Fishery Fishery Fishery Fishery Fishery Fishery 7 Mineral Mining Mineral

Mining Mining

.

Mineral Mining

Mining Mineral Mining

Mineral Mining

Mineral Mining

Mining Coal Mining o O r O O C l i V i l g f~~\i\ \x:rA:>...i

kjw ( V i i n i n g

Mineral Mining

1 h .1: AA : .A . .

kjw M i n i n g :

Minerai Mining

Mining Oil Mining Coal Mining _

Coal Mining Other Mining

9 Chemical industry Other Mining

Food Mfg Oil Mining Oil Mining Food Mfg O. Mining Tin Mining Mineral Mining

Mineral Mining

10 Oil Ref. Food Mfg Mineral Mfg Food Mfg Mineral Mfg Handicraft Food Mfg Other Mining

Food Mfg Food Mfg

11 Mineral Mfg Mineral Mfg Handicraft Mineral Mfg Handicraft Oil Ref. Other Mfg Mineral Mfg Cement Mfg Mineral Mfg 12 Ore Mfg Other Mfg Other Mfg Other Mfg Other Mfg Mineral Mfg Mineral Mfg Other Mfg Other Mfg Other Mfg 13 Other Mfg Oil Ref. Oil Ref. Oil Ref. Oil Ref. Other Mfg Oil Ref. Oil Ref. Oil Ref. Oil Ref. 14 Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities Utilities IS Construction Construction Construction Construction Construction Construction Construction Construction Construction Construction 16 Trade Trade Trade Trade Trade Trade Trade Trade Trade Trade 17 Restaurant &

Hotel Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

Restaurant & Hotel

18 Transp. & Comm. Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

Transp. & Comm.

19 Finance. lns.& Rent

Finance. Ins.& Rent

Finance. Ins.& Rent

Finance. Ins.& Rent

Finance. ins.& Rent

Finance. ins.& Rent

Finance, lns.& Rent

Finance. Ins.& Rent

Finance. Ins.& Rent

Finance. Ins.& Rent

20 Covernment Government Government Government Covernment Government Government Covernment Covernment Government 21 Services Services Services Services Services Services Services Services Services Services 22 Others Others Others Others Others Others Others Others Others Others

The Fundamental Economic Structure in Developing Countries ... · 2. THE FUNDAMENTAL ECONOMIC...

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