Quality economic growth seems to be a mantra that must be uttered by policymakers and academics in every seminar on economic development in Indonesia. The characteristics of quality economic growth are high, sustainable growth and creating jobs. Based on data from the Economic Outlook for Southeast Asia, China and India 2019: Towards Smart Urban Transportation, it shows that Indonesia's economic growth projection is 5.3%. Higher than Malaysia, which is projected to grow by 4.6%, Thailand 3.7%, and Singapore 2.7%. Moreover, in the past decade, Indonesia's economic growth has been relatively stable at 5% per year and is among the highest in the world along with China, Brazil, India, and South Africa.
However, the question is whether Indonesia's economic growth is enjoyed by most Indonesian people? How is the distribution of economic development growing bigger, both individually and regionally? The answer to the question above does not seem to be encouraging. The trend of individual income distribution in Indonesia seems to be getting worse. This is indicated by the Gini ratio that has increased from time to time. Data from the Central Bureau of Statistics shows that the Gini ratio in 2002 was 0.34 to 0.38 in 2018. This means that the condition of individual income distribution is more imbalanced.
At the same time, regional income distribution also shows similar conditions. Data from the Central Bureau of Statistics shows that over the past five years the gross regional domestic product produced by Java Island is still above 55%. This reflects that the Indonesian economy is still centered on Java. This shows that the imbalance in regional distribution is also still quite large. A study conducted by Rosmedi and Nurhayani (2014) shows that there is an unbalanced regional development in Indonesia, specifically the West Indonesia Region and the Eastern Indonesia Region. Economic development still tends to be concentrated in Java, Sumatra, and Bali, which control more than 80% of the national gross domestic product market share and the regional gross domestic product per capita in the Western Indonesia Region, which is twice as high as the Eastern Indonesia Region. Likewise, research conducted by Resosudarmo and Vidyattama (2006) found that there was a relatively large gap in per capita income in Indonesia's provinces, especially Java and outside Java.
The Spatial Dimensions of Inequality
This unequal distribution of income has resulted in social unrest, social jealousy, and even social revolution. Research conducted by Tadjoeddin et al. (2001) said that inequality of economic development between regions tends to encourage an increase in the threat of disintegration that is increasingly high in Indonesia, which originated from vertical conflicts between the center and the regions, especially provinces that have high incomes from the results of natural resources and services.
Conflict and analysis of various dimensions of inequality between regions are a result of the inequality of the central government to ensure that the wealth of an area will make the people in the region prosper. This insecurity raises collective awareness that what cannot be channeled through better political institutions will cause conflict in communities in disadvantaged areas.
What are Ways Economic Growth Can Be Achieved?
To achieve economic conditions that have quality growth, as explained above is first, continuously improving the quality of human capital with good planning. This can be done by increasing the mean years school and life expectancy to increase the productivity of human capital. Distribution of qualified educators and health workers and complete infrastructure. Productivity is a major characteristic of modern economic growth.
Second, equal distribution of infrastructure development between Java and outside Java. Inequality in infrastructure development will lead to unequal investment which will have an impact on the unequal distribution of income. Infrastructure is a driver of economic growth. From the allocation of public and private financing, infrastructure is seen as a locomotive of national and regional development. In macroeconomics, the availability of infrastructure services affects the marginal productivity of private capital, while in the context of microeconomics, the availability of infrastructure services affects the reduction of production costs.
Infrastructure has also an important influence on improving the quality of life and human well-being, among others in increasing the value of consumption, increasing labor productivity and access to employment, as well as increasing real prosperity and the realization of macroeconomic stability, namely fiscal sustainability, development of the credit market, and its influence on the labor market.
Third, the development of institutional systems. Advances in information technology are a key condition for improving the institutional system that must be carried out in order to achieve sustainable growth. The existence of technological innovation accompanied by institutional system innovations such as light bulbs that will illuminate the course of improving economic development that is being actualized.
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