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Introduction
patial inequality has long been an issue in Blitar Regency (Kabupaten) of East Java Province,
Indonesia. Inhabited by around 1,270,000 people in 2009, the North Blitar has been
considered more developed than the South. Disparities have been there in terms of various
aspects like population density, the availability of public facilities and infrastructure, and
individual income (BRG 2008). This issue has been so appealing that it came up in the debate
among the Regent candidates in the 2010 election campaign (PDI-P 2010). Certain candidate
promised that if elected he would alleviate the North-South inequality. This news not only reveals
the needs to resolve the spatial inequality, but also exposes the fact that the issue is still among the
concerns of the people.
However, the North-South inequality is actually not only the matter of Blitar Regency, but at
least the Blitar Region as a whole, which administratively includes Blitar City as well (see Figure
1). This is because a central place like Blitar City always has its surrounding areas with most
intense inter-relationship. They are inter-related in terms of various social and economic activities
like journey to work, to facilities and to get services, to form a functional region (see e.g. Glasson
1992). Therefore, when the interactions among the spatial units are not in balance mechanism,
inequality must be there. Spatial inequality can be defined as disparities among spatial units of a
region that can be perceived by people (for further discussion on the definition, see Kanbur and
Venables 2005; Kim 2008; Li and Wei 2010; Slater 1975; Zeng and Zhao 2010; Combes et al.
2011), e.g. some spatial units have proper and affordable public facilities and infrastructure while
some others do not.
Spatial inequality thus matters for at least two reasons. First, it is most probably caused by
equity failures (Sugiri 2009), especially when fairness could not be ensured in the development
process. If this is the case, Sugiri (2009) notes that poverty and unsustainability may become the
consequences. The developed spatial units usually keep growing while the backward ones stay
stagnant. The problem of poverty, then, becomes difficult to alleviate. Second, spatial inequality,
if it is allowed to keep going, may worsen the imbalanced spatial interactions which can cause
suboptimal economic growth, deep inequality of welfare, and even unsustainability (Sugiri,
Buchori and Soetomo 2011; Kanbur and Venables 2005; Kim 2008).
Notes: colours denote district (kecamatan) units of Blitar Regency, while the white area in the centre is Blitar City.
92
93
In terms of these specific functions, inequality exists. This meaning can better be understood
if, as suggested by Sen (1992), human diversity and the range of focuses are considered when
examining equality. Meanwhile, pursuing equality of an aspect may cause inequality in other
related aspects. This conveys a message that it is important to assess equity in any analysis of
inequality, because inequality that occurs without any unfairness may not need attention.
Fairness is incorporated when all development actors share the same opportunity of
accomplishing their specific functions. It is the initial opportunity to complete their specific jobs
that is to be distributed equally, but neither their functions, nor their achievements are to be
equalised. If their opportunity is not made equal, then the development itself would not be fair.
When equity is properly applied, everyone is not necessarily equal, but everything is put in its
proper place. It is like the allocation of components that makes a personal computer work. One
cannot put the main processor into the RAM (random access memory) slot and vice versa. Thus,
individual income, for example, may not be equally distributed, but, no one would complain about
another persons higher income. This is because people do not feel any injustice in the inequality
of income.
Therefore, justice in the distribution of development benefits would mean that only certain
kinds of benefit should be distributed equally, especially with regard to basic human needs. World
Bank (2006) asserts that poor people stay poor because of inadequate access to schools, health
centres, roads, market opportunities, credit, effective risk-management mechanisms and other
empowering services, to indicate that certain aspects of benefit need to be distributed equally. On
the other hand, other kinds of benefit can be distributed unequally, depending on the extent of
importance of the recipients performances in the development.
94
I
II
III
IV
Notes:
: Equity I
: Equity II
: Equity III
: Equity IV
All arrows represent positive flows, except the x arrow which is negative externality, i.e. the negative impact of the
production function to the non-production function, however, it is hardly captured by the market mechanism (the market
failure).
95
mostly metropolitan and big urban areas, is the consequence of ensuring efficient and effective
investments. Spatial inequality is thus a normal phenomenon at the initial stage of development.
Further stages of development, according to the theory, will automatically bring spatial
equilibrium and thus alleviate the inequality (Friedmann 1966; Slater 1975; Alonso 1980; Li and
Wei 2010; Zeng and Zhao 2010; Combes et al. 2011). The logic relies mainly on trickle down
effect that works significantly. This is a kind of multiplier effect in spatial sense. According to
multiplier effect rule, every economic activity -means investment- will attract other related
activities to grow and later on aggregately yield in meaningful economic growth. Accordingly, the
concentration of high productive economic activities in limited centres will trigger the growth of
related activities in the surrounding regions and finally mutual relationships among the spatial units
can be realised to bring regional growth in equilibrium situation.
The inverted U-shape rule has been confirmed in many cases of developed countries where
free competition and market mechanism have been working properly (Friedmann 1966; Slater
1975; Alonso 1980; Combes et al. 2011). In France, for example, migrations along both the spatial
and sectoral dimensions have favored an equalization of wages across space (Combes et al. 2011:
16). Furthermore, the law of diminishing returns has made the labor-depleted agricultural regions
more productive, which has triggered a catch-up of rural areas (Combes et al. 2011: 16).
In developing countries, however, such confirmation of the inverted U-shape rule can hardly
be found. In China, for example, the dynamics of regional development cannot be explained using
the simple convergence or divergence rules (Li and Wei 2010). A complex multi-dimensional
framework that includes the state, local agent and global forces which have been working
altogether in the regional development should be considered. Similarly, Zheng and Zhao (2010)
conclude that globalisation plays an important role in China. This is something new that was not
considered in the bell shape theory.
As the case of Indonesia, while the complexity may be comparable to that of China, something
in contrast is that the practices of regional development in Indonesia have always been in favour
of big investors while small stakeholders have been left behind (Mubyarto 1998; Kuncoro 2005).
Infrastructure and public facilities have been well provided in regions where high productive
activities agglomerate, while backward regions have been lack of even the basic ones. This has
worsened spatial inequality at practically all levels. At the national level, the West-East inequality
has been there since the Soeharto era. In Java, North-South and urban-rural inequalities are still
difficult to alleviate, and even in the South regions, like Blitar, spatial inequality is an important
issue.
The framework developed by Lo, Salih and Douglas (1981) can explain the situation of
Indonesias regional development in some respects. The main problem is the failure of local
populations to share properly in development. In general, there has been a dual economy, i.e. a
highly-productive one occupied by a small portion of the population and a less-productive one
engaged by the majority (Lo, Salih and Douglass 1981). The highly-productive economy,
comprising the manufacturing and service sectors or natural resource exploitation, usually needs
significant capital. Moreover, it also requires skilled workers since high technology is used. These
conditions mean that only those well educated are able to involve, and they are the minority in the
developing world. Consequently, the majority of people are engaged in low productive economic
activity characterised by labour intensive, low skill and low capital requirement.
This dualism framework is still there in Indonesia. It is more unfortunate that inequality in the
availability and affordability of infrastructure and public facilities is also existent. All this indicates
that equity failures are most probably the main cause why the backward regions are unable to catch
up development.
Efforts have certainly been made to alleviate the inequality; however, as suggested by Kuncoro
(2005), much more appropriate and well targeted regional policies are needed. To be able to
recommend proper government intervention and propose appropriate measures for other
96
stakeholders as well, understanding on factors affecting spatial inequality and how they have been
working is needed. This study is therefore essential.
The Propositions
Pondering on previous discussion more carefully, factors affecting spatial inequality and how the
mechanisms work can be identified through investigation on the two equity failures. It is argued
that the equity failures are at the core of the development mechanism that makes the inverted Ushape rule is not working.
The two equity failures can be related to eight policy aspects as Sugiri (2009) has asserted.
How people experience in these aspects determine their perceptions on the equity issues. The
policy aspects are as follows:
For equity issue Ia (income and employment system):
o Job opportunity;
o Taxation;
o Minimum wage;
o Social security.
For equity issue Ib (access to facilities and services):
o Education services;
o Health services;
o Basic Infrastructure (Road, Electricity, Clean Water, Drainage,
Telecommunication);
o Sheltering/housing for the worse-off.
Methodology
Approach and Stages of the Research
This study would result in a general comprehension on this issue in the Blitar Region before
moving forward towards deeper understanding, which would become a continuation of this
research. Data and information have been collected from relevant institutions for the secondary
data, and from distributing questionnaires to the respondents for primary data. In addition, field
observation, an important qualitative method, has been done to take the researchers into an initial
and general view about the spatial inequality in the region.
Four stages have been completed in the research. First, preparation was made, comprising
literature review and research design. Having the research design in hand, confirmation of the
propositions was started by observation and collecting data from the field. The third stage has also
been done by compiling, systematizing, and analysing the data and information. Finally, the fourth
stage has been to conclude and to give relevant recommendations based on the findings.
97
represented by those of the household heads. Therefore, questionnaires for the worse-off were
distributed randomly to the poor households, proportionally to districts (kecamatan) as the spatial
units.
Solvins formulae (see e.g. Bungin 2010) is used to identify the sample size:
Notes:
n = sample size
N = population size
d = degree of error
Applying 90% of confidence level, with N = 86,642 and d = 0.10, the sample size is 99.77,
rounded to 100 poor households in Blitar. This is then proportionally distributed to districts as can
be seen in Table 1.
Table 1: Sample Size of the Worse-off People by Districts in the Blitar Region
No.
District (Kecamatan)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Sananwetan
Kepanjenkidul
Sukorejo
Kanigoro
Talun
Selopuro
Kesamben
Selorejo
Doko
Wlingi
Gandusari
Garum
Nglegok
Sanankulon
Ponggok
Srengat
Wonodadi
Udanawu
Bakung
Wonotirto
Panggungrejo
Wates
Binangun
Sutojayan
Kademangan
TOTAL
98
Poor
Households
1,696
1,267
1,325
5,697
3,702
3,345
2,958
2,231
1,975
3,503
5,347
3,996
4,604
4,296
6,985
3,504
2,904
2,804
3,072
3,353
2,833
3,356
3,169
3,013
5,707
Sample
Size
2
1
2
7
4
4
3
3
2
4
6
5
5
5
8
4
3
3
4
4
3
4
4
3
7
86,642
100
Sources: data adapted from BRSO 2010; BCSO 2010.
Sub-region
NORTH
SOUTH
Findings Discussion
This section comprises two subsections. The first is an understanding on spatial inequality in the
Blitar Region based on secondary data and the field observation. Despite the limited availability
of the secondary data, important findings have been there and lead to essential discussion in the
second subsection, which confirms the propositions.
99
District
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Sananwetan
Kepanjenkidul
Sukorejo
Kanigoro
Talun
Selopuro
Kesamben
Selorejo
Doko
Wlingi
Gandusari
Garum
Nglegok
Sanankulon
Ponggok
Srengat
Wonodadi
Udanawu
Bakung
Wonotirto
Panggungrejo
Wates
Binangun
Sutojayan
Kademangan
Length of Roads
(Km)
75.378
80.334
83.908
41.09
42.67
35.02
56.76
61.31
83.89
41.69
70.69
34.89
57.63
40.69
103.50
61.71
43.82
51.73
61.43
90.30
67.20
51.19
64.27
44.29
83.77
Area (Km2)
12.151
10.502
9.925
55.55
49.78
32.95
57.07
52.12
70.95
72.7
88.23
54.56
92.56
33.33
103.83
53.99
41.95
39.37
104.15
171.63
119.04
68.76
76.79
44.2
105.28
Notes: District names written in italics are those of South part of Blitar
100
Accessibility
Score
6.20
7.65
8.45
0.74
0.86
1.06
0.99
1.18
1.18
0.57
0.80
0.64
0.62
1.22
1.00
1.14
1.04
1.31
0.59
0.53
0.56
0.74
0.84
1.00
0.80
Notes: Kota Blitar: Blitar City; Kabupaten Blitar: Blitar Regency; Propinsi Jawa Timur: East Java Province
Figure 4: Economic Growth Rates of Blitar Region and East Java Province, 2006-9
Sources: data adapted from BRSO 2010; BCSO 2010.
The results may be different to what have been believed so far. While people believe that the
North-South inequality has been there in almost every aspect of welfare, the discussion has
confirmed on two aspects only, i.e. in the population density and in the accessibility levels in terms
of road availability. Although many secondary data based on district as the smallest unit have been
unavailable to make it impossible for complete analysis, the discussion has also found that
economic inequality in terms of poverty incidence is not in the North-South pattern. Economic
inequality is in a somewhat randomised pattern where poverty is evidenced in both North and
South parts of the region.
It can also be inferred that agglomeration and urbanisation economies may have brought those
aspects together to result in the spatial inequality. It is common that areas that are perceived as
more developed in various ways would attract more people to live in. As Blitar City has been the
centre of the region even since before the Dutch colonization era, the mechanism of agglomeration
economy applies. This has also been encouraged by policies of the governments and enforced by
the urbanisation economy. Unfortunately, this keeps going without any sign of inversion to the
extent that inequities may have been happening.
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Policy Aspect
Ia
Existing
overall score:
4.43 (severe)
Ib
Existing
overall score:
6.46
(moderate)
Job Opportunity
Taxation
Minimum Wage
Social Security
Education
Services
Health Services
Basic
Infrastructure
Sheltering
Notes:
Existing
Situation
(Inequity level)
severe (3.97)
moderate (6.07)
moderate (5.00)
severe (2.70)
moderate (5.59)
Trend of the
last 5 years
Priority Level
2
5
3
1
4
moderate (6.65)
moderate (6.36)
fair (6.41)
fair (6.07)
7
6
low (7.24)
fair (7.50)
The score is on the scale of 0 10; Severe: <= 5.00; Moderate: 5.01 6.99; Low: 7.00 9.99;
For the trend, not good (d<= -0.50); fair (-0.50<d<0.50); not bad (2.00=>d>= 0.50); good (d>2.00), where d is
the increase or decline during the last five years.
Policy Aspect
Existing
Situation
(Inequity level)
severe (4.48)
moderate (5.28)
moderate (5.00)
severe (2.40)
severe (4.70)
Trend of the
last 5 years
Ia
Existing
overall score:
4.29 (severe)
Ib
Existing
overall score:
6.56
(moderate)
Job Opportunity
fair (4.29)
Taxation
not good (6.92)
Minimum Wage
not good (5.67)
Social Security
fair (2.86)
Education
fair (5.09)
Services
Health Services
low (7.50)
fair (7.16)
Basic
moderate (6.40) fair (6.60)
Infrastructure
Sheltering
low (7.62)
fair (7.50)
Source: Questionnaire results, 2011.
Priority
Level
2
5
4
1
3
7
6
8
It can clearly be confirmed that equity failures have been there with regard to issue Ia
(employment system) and Ib (services and infrastructure). The existing situations show a severe
level of inequity Ia and a moderate level of inequity Ib in both the North and South parts of Blitar.
102
There is no significant difference between the two sub-regions as far as the overall inequities are
concerned. More unfortunate is that all the trends are between not good to fair.
Job Opportunity
In this regard, both the North and South Blitar are in severe inequity with a slightly worse situation
in the North. The trends during the last five years are also different. The significant difference in
the trends may reflect some important features. Firstly, the North Blitar as a faster growing subregion led by Blitar City has been attracting people to live in. However, the jobs created by the
economic growth have been insufficient for all the incoming job seekers, especially for those who
are actually locals. Although the economic performance and annual growth rates have been fine,
the quality is definitely questionable. That is why the worse-off people feel deprived from the
opportunity severely. Secondly, although the existing situation is not better in the South, the fair
trend as perceived by the worse-off may be an indication of higher resilience level in the South.
Further study on this issue may be needed to yield in more appropriate job creation policies.
Taxation
It is apparent that the worse-off people are well aware of the importance of taxation and they pay
all taxes obligated to them. However, their perception that equity failure is there at the moderate
level in both North and South parts of Blitar and that the trend is not good could perhaps be
important indications of their feelings on the improper use of taxes for development and
distribution purposes.
Minimum Wage
It is interesting that not all the worse-off are aware of the minimum wage standard commanded by
the local governments of Blitar Regency and Blitar City. However, they all agree that decision
about the minimum wage should not be left to market mechanism alone. Rather, local governments
should interfere in favour of the deprived labour force. Furthermore, equity failure in this aspect is
perceived at the moderate level for both the North and South parts of Blitar. On the other hand,
different trends occur between the North (fair) and the South (not good).
Social Security
Almost all of the worse-off people in Blitar (97%) are of the opinion that all of the population
should get proper social security. However, only 17% of them believe that jobless people should
get social allowance for fulfilling their basic needs. This to some extent shows that they are actually
hardworking people with high work ethos. There is no significant difference between the North
and South perceptions in this regard. Equity failure is perceived at the severe level. The trend in
the last five years is considered fair in both the North and the South Blitar.
Education Services
All of the worse-off people agree that good and affordable education should be available for all
(equal opportunity). 71% of the respondents have children at the school age group. However, 29%
of them in the North Blitar and 10% in the South Blitar have not been able to enrol their children
to schools due to financial reasons. In general, inequity in education services is considered at the
moderate level in the North and severe in the South. The trend in both sub-regions is considered
fair. This is just as expected, i.e. in accordance with the commonly believed North-South
inequality.
103
Health Services
That all respondents believe that good and affordable health services should be available for all
has confirmed the proposition of equal opportunity in this issue. However, the existing health
services are perceived as insufficient by 27% of the respondents (34% in the North and 10% in the
South). The main reason of this dissatisfaction is the over agglomeration of the health service units
in mostly Blitar City (78%). It is interesting that the worse-off people of the North Blitar are those
more dissatisfied. This is in accordance with the overall inequity in this aspect, which is perceived
as at the moderate level in the North and, somewhat surprisingly, at the low level in the South.
Sheltering/Housing
It is interesting to know that majority of the worse-off (85%) are of the opinion that good and
affordable sheltering should be made available for them by the governments. This is in contrast
with the recent governmental paradigm as facilitator, not as provider. However, when considering
the equity failure in this aspect, the worse-off people perceive it as at the low level with fair trend
for both the North and South parts of Blitar. As the field observation has confirmed that there is no
slum or shanty area in the Blitar Region, this aspect would apparently be no problem.
Concluding Remarks
A complete answer to the research question has been obtained through the confirmation of the
propositions. In addition to this, enrichment to the propositions has also been resulted from the
findings discussion as will be presented below. It is therefore strongly recommended for the local
governments of Blitar Regency and Blitar City, and the Provincial Government of East Java to
reformulate the regional policies in the eight aspects with prioritisation and important
considerations as described below.
104
On the other hand, for the South part of Blitar the priority order should be:
1. Social security
2. Job opportunity
3. Education services
4. Minimum wage
5. Taxation
6. Basic infrastructure
7. Health services
8. Housing for the poor and low income people.
105
Table 5: Important Things to Consider in the Policy Reformulation in the Blitar Region
No.
Policy Aspect
Important Considerations
Social Security
Job Opportunity
Education
Services
Minimum
Wage
Taxation
Basic
Infrastructure
Health Services
Sheltering
It is the top priority for both the North and South parts, as perceived by
people
Types of social security able to improve affordability in education and
health services should be prioritised
May start integrating CSRs into this aspect
Corruption is perceived as severe. So, corruption eradication is very
important.
The second priority for both the North and the South
Training for low skilled workforce should be well related to the
economic activity needs
The expectation of the worse-off people is more on local and provincial
policies to encourage
Corruption eradication is very important because corruption is still
perceived by people as severe.
The third priority for the South, while the fourth for the North
The affordability to basic education services is decreasing significantly
Programs to provide innovative financial help for the worse-off should
be formulated
Need to integrate with social security schemes
Corruption eradication is a must.
The third priority for the North would mean for the Blitar City, while
the fourth priority for the South could mean for the Blitar Regency
Provincial and local governments should intervene
Need to increase the minimum wage rates
Need more effective enforcement as it has been weak so far.
Peoples awareness about tax function is good
Peoples willingness to be taxed is good
The existing tax rates are too high
Need to minimize double tax cases
Corruption eradication is very important.
Infrastructure services in remote areas (both the North and South Blitar)
need attention
Electricity should be prioritized in the North, while clean water in the
South
Need innovative infrastructure development plans, including the
application of Public Private Partnerships
Corruption eradication is important.
Business as usual may apply in this aspect as the situation and the trend
have been good enough; however,
Remote areas in both the North and the South need more attention,
especially because there is a tendency to over agglomeration in Blitar
City.
Business as usual may apply in this aspect as the equity failure is low,
even the lowest among other aspects, and the trend is fair.
106
Acknowledgement
The authors would like to express much gratitude to The Master of Urban and Regional
Development Program of Diponegoro University for the encouragement through the fund granted
for this research.
107
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