Economic Development and Convergence In Sumatra Island, Indonesia

  • Arif Rahman Economics Department, Faculty of Economics and Business, University Sumatera Utara, Indonesia
  • Monika Andrasari Economics Department, Faculty of Economics and Business, University Sumatera Utara, Indonesia
  • Sirojuzilam Sirojuzilam Economics Department, Faculty of Economics and Business, University Sumatera Utara, Indonesia
Keywords: Convergence; Inequality; Real Income Percapita; Covid-19; Poverty


The island of Sumatra, one of the largest contributors to the Indonesian economy, has experienced increased economic growth from time to time, but the acceleration of growth from each province has a different pace.  This study aims to analyze the development and convergence of real per capita income that occurred on the island of Sumatra from 2011-2020, using panel data from 10 provinces in it. The novelty of this study incorporates Klassen's analysis as an effort to provide more concrete recommendations as well as the calculation of the half-life value per province which illustrates the convergence speed of each region. This can support the strength of the recommendation. We also divide the two observation periods, namely during normal conditions, and include 2020 as the year the economic shock occurred to compare changes in the convergence rate. Klassen's typology of economic development on the island of Sumatra for the 2016-2020 period shows a shift in the Riau Island Province towards being depressed and Bangka Belitung in the lagging zone. Meanwhile, Aceh Province is getting closer to the potential zone line. The level of inequality from the average value of the Williamson index is classified as moderate and during the year of observation shows an increase in value indicating convergence. The Covid-19 pandemic has reduced inequality, But on the other hand, the pandemic has also caused a decrease in real income in all the provinces observed, which means that welfare has decreased. The half-time value of each province implies economic stagnation that will occur in depressed developed regions and opens up opportunities for underdeveloped regions to spur growth in their real per capita income. In measuring the convergence itself, there was a convergence of real income per capita on the island of Sumatra. In other words, the conditional convergence model has a relatively higher convergence speed than the absolute convergence model. As an implication of the study, efforts to equalize per capita income on the island of Sumatra can be accelerated by spurring economic growth, HDI, and the distribution of gross fixed capital in areas that are in quadrants 3 and 4. Policies in eradicating poverty are a booster in accelerating the convergence process.


Download data is not yet available.


Abramovitz, M. (1986). Catching Up, Forging Ahead and Falling Behind. The Journal of Economic History, Vol.46(2), 385–406.

Acheampong, A. O., Sunday, T., & Janet, A. (2023). Income inequality and economic growth in BRICS : insights from non ‑ parametric techniques. The Journal of Economic Inequality, 0123456789.

Akram, V., & Rath, B. N. (2020). Does export diversification lead to income convergence? Evidence from cross-country analysis. Buletin Ekonomi Moneter Dan Perbankan, 23(3), 319–344.

Amos, O. M., & Ireland, T. C. (2015). An Analysis of Regional Income Variation among the Five Regions of Oklahoma. Modern Economy, 15, 133–144.

Andhiani, K. D., Erfit, & Bhakti, A. (2018). Analisis Pertumbuhan Ekonomi dan Ketimpangan Pembangunan di Wilayah Sumatera. E-Jurnal Perspektif Ekonomi Dan Pembangunan Daerah, 7(1), 26–34.

Barro, J. R., & Martin, X. S. (2004). Economic growth. In The MIT Press.

Barro, R. J., & Sala-I-Martin, X. (1991). Convergence across States and Regions. Brooking Papers on Economic Activity, 107–182.

Barro, R. J., & Sala i Martin, X. (1990). Working Paper No 3419 characteristics . Two types of existing theories seem to fit the facts : the. August.

Barro, R., & Sala-i_martin, X. (1997). Technological Diffusion, Convergence, and Growth. Journal of Economic Growth, 2(1), 1–26.

Becker, G. S. (1962). Investment In Human Capital : A Theoritical Analysis. The Journal of Political Economy, LXX(5), 9–49.

Brandt, L., Ma, D., & Rawski, T. G. (2014). From divergence to convergence: Reevaluating the history behind China’s economic boom. Journal of Economic Literature, 52(1), 45–123.

Brussevich, M., Liu, S., & Papageorgiou, C. (2022). Income Convergence Or Divergence in The Aftermath of the COVID-19 Shock? IMF Working Paper, 1–37.

Budiman, A., Aimon, H., & Yeniwati. (2018). Analisis Konvergensi Antar Provinsi ( Studi Kasus Pulau Sumatera ). Ecogen, 1(3), 511–520.

Deaton, A. (2021). Covid-19 And Global Income Inequality.

Eaton, J., & Kortum, S. (1994). inventions earn at home and abroad . Patents affect the return to invention . We relate the expected value of patent protection in that country . We can thus infer the direction and.

Furceri, D., Loungani, P., Ostry, J. D., & Pizzuto, P. (2021). Will COVID-19 Have Long-Lasting Effects on Inequality ? Evidence from Past Pandemics.

Gujarati N. Damodar, D. C. P. (2009). No Title (5th Editio). McGraw-Hill.

Hartmann, D., Guevara, M. R., Jara-Figueroa, C., Aristarán, M., & Hidalgo, C. A. (2017). Linking Economic Complexity, Institutions, and Income Inequality. World Development, 93, 75–93.

Isaac, A. G. (2017). Quick Notes on Growth Contents.

Jones, C. I. (1997). Convergence revisited. Journal of Economic Growth, 37(2), 131–153.

Kaitila, V. (2013). ETLA Working Papers (Vol. 2420, Issue 14).

Kumo, W. L. (2011). Growth and Macroeconomic Cnvergence In Southern Africa. African Development Bank, June, 1–34.

Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, XLV, 1–28.

Li, K., & Zhou, X. (2011). Cross-country Convergence and Growth: Evidence from Nonparametric and Semiparametric Analysis. APEC Study Center Consortium Conference, Septmeber, 1–28.

Mankiw. (2016). Macroeconomics Ninth Edition.

Mihaela, N. D., & Georgiana, C. O. (2015). Correlations Between Human Development and Economic Growth. Analele Universităţii Constantin Brâncuşi Din Târgu Jiu : Seria Economie, 1(1), 118–122.

Neycheva, M. (2018). MRW model of growth: foundation, developments, and empirical evidence. Bulgarian Journal Of Business Research, April, 1–11.

Nur Hidayah, R. A. D., & Tallo, A. J. (2020). Analisis Ekonomi Provinsi Jawa Tengah Periode 2015-2019 dengan Metode Indeks Williamson, Tipologi Klassen dan Location Quotient. Aksara: Jurnal Ilmu Pendidikan Nonformal, 6(3), 339.

Nurlaili, R. U., & Cahyadin, M. M. (2020). Economic and Non-Economic Factors Effect Per Capita Income in Indonesia. Economics Development Analysis Journal, 8(4), 315–323.

Sayed, A., & Peng, B. (2021). Pandemics and income inequality : a historical review. SN Business & Economics.

Sirojuzilam, Turnip, E. B. A., & Saputra, J. (2020). Supply chain strategy for implementing fiscal decentralization and its effect on regional performance in North Sumatera province, Indonesia. International Journal of Supply Chain Management, 9(1), 975–981.

Solow, R. (1956). A Contribution to the Theory of Economic Growth. Journal of Economics, 70(1), 65–94.

Valdes, B. (2003). The Journal of Economic Education An Application of Convergence Theory to Japan ’ s Post-WWII Economic " Miracle " An Application of Convergence Theory to Japan ’ s. The Journal of Economic Education, 31(1), 61–81.

Yulisningrum, C. A. A., & Setyastuti, A. R. (2012). Analisis Konvergensi Pertumbuhan Ekonomi Di Indonesia Tahun 1992-2012. Program Studi Ilmu Ekonomi Dan Studi Pembangunan Fakultas Ekonomi Universitas Atma Jaya Yogyakarta, 1–10.

Yuslinaini, Masbar, R., & Syehalad, M. N. (2015). Analisis Konvergensi Pertumbuhan Ekonomi Antar Provinsi Di Pulau Sumatera. Jurnal Ilmu Ekonomi, 3(3), 69–74.

Zulham, T., Sirojuzilam, Bahri, S., & Saputra, J. (2019). Supply chain strategy for convergence of regional economic growth East Coast North Sumatera, Indonesia. International Journal of Supply Chain Management, 8(5), 325–335.

How to Cite
Rahman, A., Andrasari, M., & Sirojuzilam, S. (2023). Economic Development and Convergence In Sumatra Island, Indonesia . EcceS: Economics Social and Development Studies, 10(1), 23-47.
Volume 10 Number 1, June 2023
Abstract viewed = 86 times