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Dynamic analysis of regional convergence in Indonesia


Firdaus, Muhammad and Yusop, Zulkornain (2009) Dynamic analysis of regional convergence in Indonesia. International Journal of Economics and Management, 3 (1). pp. 73-86. ISSN 1823-836X


This study examines income convergence among provinces in Indonesia using dynamic panel data approach. The results show that static and dynamic panel data approaches produce different results of convergence patterns. Consistent with the theory, the Ordinary Least Square (OLS) and fixed-effects estimators provide the upper and lower bounds. The first-differences generalized method of moments (FD-GMM) provides invalid estimators which are lower than the coefficient from the fixed effects estimators due to the weak instruments problem. The system-GMM (SYS-GMM) estimators are found to be unbiased, consistent and valid. They show that convergence process prevails among provinces in Indonesia for the period 1983 – 2003. However the speed of convergence is relatively very slow (0.29) compared to other studies in developing countries.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Faculty of Economics and Management, Universiti Putra Malaysia
Keywords: Dynamic panel data; Income convergence; Indonesia
Depositing User: Nabilah Mustapa
Date Deposited: 03 Aug 2015 04:32
Last Modified: 03 Aug 2015 04:32
URI: http://psasir.upm.edu.my/id/eprint/39447
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