Indonesia's Trade and Price Interventions

Pro-Java and Pro-Urban

Bibliographic Data

ID8416495
AuthorsJorge Garcia Garcia (World Bank, corresponding author)
Year2000
Volume36
Issue3
Pages93-112
Publication date2000-12-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueBulletin of Indonesian Economic Studies (JOURNAL)
Journal identifiersISSN: 0007-4918 • E-ISSN: 1472-7234
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00074910012331338993
OpenAlexW2148472045
LanguageEN
Citations received2
References cited10

In 1987 and 1995 Indonesia's price and trade policies (intervention regime) increased the income of Java's urban centres and reduced that of people living in rural Java and the other islands. This happened because the regime protected manufacturing activities, most of them located in Jakarta, Bandung and Surabaya, and taxed primary sector based activities, located outside urban Java. It protected some primary sector based activities directly, but the entire intervention regime, with manufacturing protection included, taxed them. As a result, regions deriving income from primary sector based activities lost. Indonesia's intervention regime is regressive: it transfers income from poorer to richer regions. This regime and its effects on regional incomes continue. Governments have designed programs to raise the income of Eastern Indonesia, but have omitted the most effective instrument: opening the economy to international competition. A serious attempt to reduce regional income disparities should begin by eliminating barriers to international trade

Business · Competition (biology) · Economic growth · Economics · International trade · Intervention (counseling) · Java · Rural area · Asian Studies and History · Economic Growth and Fiscal Policies