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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 31, No. 3, pp.333-353
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2018
Received 16 Apr 2018 Revised 25 Jul 2018 Accepted 26 Jul 2018

Do Infrastructures Influence the Efficiency Convergence of the Indonesian Economy?

Rudi Purwono ; M. Khoerul Mubin ; Mohammad Zeqi Yasin
Rudi Purwono, Lecturer, Department of Economics, Airlangga University, Indonesia, Tel: +62-31-503-3642, Fax: +62-31-502-6288 rudipurwono@feb.unair.ac.id
M. Khoerul Mubin, Lecturer, Airlangga University, Indonesia, Tel: +62-857-3013-3290, Fax: +62-31-502-5910 mkmubin@feb.unair.ac.id
Mohammad Zeqi Yasin, Analyst, Coordinating Ministry for Economic Affairs, Jakarta, Indonesia, Tel: +62-856-4627-8990 mohammad.zeqi-13@feb.unair.ac.id

JEL Classification: O1, O2, O4

Abstract

In the last 10 years, Indonesia has set its infrastructure development to support the economy. Infrastructure, as the vital part of development, contributes to economic performance proxied by technical efficiency. This research aims to examine the role of infrastructure (water, electricity, and roads) toward the convergence of technical efficiency. Data from 33 provinces of Indonesia for the period of 2008–2015 were analyzed using stochastic frontier analysis (SFA) and generalized method of moments (GMM). Results show that technical efficiency converged during the period of interest. Further investigation suggests that water, electricity, and roads exert an important influence on the emergence of efficiency growth and its convergence.

Keywords:

Efficiency, Infrastructure, Stochastic Frontier Analysis, Convergence

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