Decentralization and Regional Economic Growth in Indonesia: A Comparative Analysis of Java and Eastern Indonesia

Abstract

Decentralization in Indonesia has significantly reshaped regional economic landscapes by devolving authority to local governments. This paper investigates the impact of decentralization on regional economic growth, with a comparative analysis between Java and Eastern Indonesia. The study highlights how regional autonomy has enabled some provinces to tailor policies that better address local needs, leading to improved economic performance. In Java, where industrialization and infrastructure development are more advanced, decentralization has facilitated increased local investment and innovation. In contrast, Eastern Indonesia, characterized by its geographical isolation and resource dependence, faces challenges in leveraging decentralization for growth. The paper analyzes how differences in local governance, infrastructure, and resource management influence regional economic outcomes. By providing policy recommendations based on the findings, this research contributes to the broader debate on the effectiveness of decentralization in promoting balanced regional development and reducing interregional disparities in Indonesia.