CASE STUDY : EAST KALIMANTAN

to Fulfill a Assignment

Regional Economics Course

Lecturer

Prof. Mudrajat Kuncoro, M.Soc.Sc, Ph.D

Prepared and compiled by

1. Marinda Asih Ramadhaniah 14/372376/PEK/19486

2. Desy Kurniawati 14/372245/PEK/19471

3. Agustin Wijayanti 14/372258/PEK/19475

4. Ermawati Septianingtyas 14/372244/PEK/19470

FACULTY OF ECONOMICS AND BUSINESS

UNIVERSITAS GADJAH MADA

YOGYAKARTA

2015

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1. Introduction

This study case is in East Kalimantan. The period is from 1993 until 2012.

Figure 1.1 Map of East Kalimantan

The areas of East Kalimantan is 21.798.596 Ha which consist of 19.695.875 Ha of

land and 2.102.721 Ha of sea (4-12 Mile). East Kalimantan consist of 14 districs. The

10 regencies are Nunukan, Malinau, West Kutai, Bulungan, Berau, East Kutai, Kutai

Kartanegara, Penajam Paser Utara, and Tana Tidung. The 4 cities are Balikpapan,

Samarinda, Bontang, and Tarakan. Yet, in this case we studied 12 districs to compare

the before decentralization (1993 - 2000) and after decentralization (2001 - 2012).

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Penajam Paser Utara is included in Paser regencies and Tana Tidung is included in

Bulungan regencies.

Figure 1.2 8 Strategic Areas of East Kalimantan

There is 8 strategic areas in the province of East Kalimantan which stated in draft

spatial East Kalimantan province. First area is Industrial Areas of Kariangau and

Buluminung in Balikpapan and PPU. Second area is areas of timber, shipping, industry

and services in Samarinda. Third area is Industrial Area of Gas and Condesate in

Bontang. Fourth area is Special Economic Zone of Maloy Batuta Trans Kalimantan in

East Kutai. The fifth area is Tourism industrial area of Derawan Island in Berau. The

Sixth area is Farm Industrial Estate in Paser and PPU and the seventh area is Farm

Industrial Estate in Kutai Kartanegara and West Kutai. The last area is strategic area

border of Mahakam Ulu.

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The vision of East Kalimantan government is Advanced East Kalimantan 2018.

There are three agenda of East Kalimantan development economic. They are creating

the secure, democratic, and peaceful condition of East Kalimantan that supported by

good governance, creating the regional economy that has competitiveness and pro

citizen, and increasing the human resources quality and welfare.

The GRDP constant of East Kalimantan from 1993 - 2012 tend to increase every

time. Period 2000-2012, GRDP Constant price With Oil and Gas increase significantly

from 82,45 Trillion rupiahs in 1993 to 110.079 Trillion rupiahs in 2012. Period 2000-

2012, GRDP Constant price Without Oil and Gas increase significantly from 82,45

Trillion rupiahs in 1993 to 83.59 Trillion rupiahs in 2012. Oil and Gas dominated the

structure of GRDP East Kalimantan. There is big difference value between GRDP

constant price with oil and gas and GRDP constant without oil and gas. Economic

growth in East Kalimantan and most of the districs is fluctuated.

Figure 1.3 GRDP Constant Price of East Kalimantan 1993 - 2012 (Trillion Rp.)

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Figure 1.4 GRDP Growth of East Kalimantan 1993 - 2012 (%)

Figure 1.5 GRDP Growth of Districs in East Kalimantan 1993 - 2012 (%)

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The average of GRDP per capita over all districs of East Kalimantan is 59.43

million rupiahs. The districs that have higher GRDP per capita than the average is East

Kutai, Kutai Kartanegara, and Bontang.

Figure 1.6 GRDP Per Capita Districs in East Kalimantan

1993 - 2012 (Million Rupiahs)

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The average of GRDP growth over all districs of East Kalimantan is 22.47%. The

districs that have higher GRDP growth than the average is Bulungan, Berau, East Kutai,

Kutai Kartanegara, and Bontang.

Figure 1.7 GRDP Growth Districs in East Kalimantan 1993 - 2012 (%)

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2. Regional Typology of East Kalimantan

GRDP Per Capita in Est Kalimantan, 1993-2012

Source : Processed from BPS (2013)

Figure 3.1. Average GRDP Per Capita of Regions in East Kalimantan, 1993-2012

Figure 3.1 shows there are some regions that have GRDP per Capita higher than

average GRDP per capita of East Kalimantan. They are Bontang, Balikpapan, Kutai

Kartanegara, and East Kutai. The main sectors that have role in that three regions are

manufacture, mining and quarrying. Regions that have GRDP per Capita lower than

average GRDP per capita of East Kalimantan are Paser, West Kutai, Berau, Malinau,

Bulungan, Nunukan, Samarinda, and Tarakan.

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Source : Processed from BPS (2013)

Figure 3.2 . Economic Structure of East Kalimantan Based on Regional Typology,

1993-2012

Based on Klassen typology, East Kalimantan is divided into four area:

a. High income and high growth area

District that includes the category of advanced and fast growing sub-district

generally developed regions both in terms of development or growth rate. East

Kutai and Bontang are high growth and high income districts in East

Kalimantan.

b. High income but low growth area

This district is a district that is relatively advanced but within a few years of

growth are relatively small, due to the suppression of the main activities of the

subdistrict. Kutai Kartanegara is high income but low growth district in East

Kalimantan.

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c. High growth but low income area

This district is a district that has great potency but itcan not be processed

properly, therefore the income is still below the average. Berau and West Kutai

are high growth but low income districts in East Kalimantan.

d. Low income and low growth area

This district is a subdistrict that are economically very underdeveloped , both in

terms of economic growth and income per capita. Tarakan, Bulungan,

Balikpapan, Samarinda, Paser, Nunukan and Malinau are low growth and low

income districts in East Kalimantan.

INEQUALITY

1. Economic Inequality

Economic equality among region is phenomenon which has been long

enough existing. Result of development simply has not fully is enjoyed equally

by all layer or various resident factions of all area or equally has not fully can

overcome inequality problems multi region.

Williamson ( 1965) studied about the relation of inter disparity regional

with level of development of economics, by using economics data which has

develop and is being growing, found that during development early stage,

disparity regional becomes bigger and development concentration of in certain

areas. At phase which more matured from growth of economics seen existence

of balance multi region and disparity decreases with significant.

Inequality describes the gap between the rich (high income) and the

poor (low income) (Taylor, 2012). Inequality is different from poverty but

related to it. Inequality concerns variations in living standards across a whole

population. By contrast, poverty focuses only on those whose standard of living

falls below an appropriate threshold level (such as a poverty line) (McKay,

2002).

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2. Measure the Inequality

Measuring changes in inequality helps determine the effectiveness of

policies aimed at affecting inequality and generates the data necessary to use

inequality as an explanatory variable in policy analysis (Anonim, 2002).

The personal or size distribution of income is the most commonly used

by economist. It deals with individual persons/households and the total incomes

they receive. A common method is to divide the population into distinct

groups/sizes such as: successive quintiles (fifths) or deciles (tenths). The ratio of

the incomes received by the top 20% and the bottom 40% of the population

called a Kuznets ratio. Another commonly measures are Lorenz Curves and Gini

Coefficients. In this task, we will more concern about the other measures, that

are Williamson Index and Entropy Theil Index.

a. Williamson Index

Regional inequality can be measured by a formula :

where :

yi : GRDP per capita of province i

: GRDP per capita of benchmarking province

Ai : Number of population in province i

: Number of population of benchmarking province

The lower WI or closer to 0, the lower regional inequality.

The higher WI or higher than 0, the higher regional inequality.

b. Entropy Theil Index

The concept of entropy of a distribution is essentially an application of

the concept of information theory to measure economic inequality and

concentration of industry.

The Theil index offer many advantage compare to other indexes. It allow

us :

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To make comparison over time/ in certain period, not just in one point of

time

To measure in smaller geographic sub unit

The formula :

Where:

I (y) = total entropy index of spatial inequality in Indonesia

Yi = jobs segment of province i to total GDP in Indonesia

The lower Entropy Theil index, the lower regional inequality.

The higher Entropy Theil index, the higher regional inequality.

Source : Processed from BPS (2013)

Figure 3.3. Williamson Index and Theil Index in East Kalimantan,

1994-2012

Williamson index curve is close than 1, so it means the inequality in East

Kalimantan is relatively high between its districts. Both of the Williamson

curve and Theil curve, they show similar trend. They go upward trend in

1993-2001 and then they go downward trend in 2002-2012. It means at the

beginning the inequality tends to increase, but at a time it tends to decrease.

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c. Kuznet Hypothesis in East Kalimantan

Source : Processed from BPS (2013)

Figure 3.4. Curve Between GRDP Per Capita in East Kalimantan and

Williamson Index, 1994-2012

The result of empirical test in 12 regions of East Kalimantan during 1994-

2012 shows the inverted U-curve. It means at the beginning of the growth of

inequality get worse and at subsequent stages inequality decreased, but at a

time the inequality will increase again and finally decreases again. It proves

that East Kalimantan can follow the Kuznets hypothesis.

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Source : Processed from BPS (2013)

Figure 3.5. Curve Between GRDP Per Capita in East Kalimantan and

Theil Index, 1994-2012

Similar with Williamson index, curve betweeen GRDP per capita in East

Kalimantan and Theil index shows the inverted U-curve. It means at the

beginning of the growth of inequality get worse and at subsequent stages

inequality decreased, but at a time the inequality will increase again and

finally decreases again. It proves that East Kalimantan can follow the

Kuznets hypothesis.

Table 3.1. Pearson Correlation Between GRDP Per Capita, Williamson

Index and Theil Index

Correlations GRDP Per Capita Sig (2-tailed)

Williamson Index 0.064 0.79

Theil Index -0.227 0.336

Source : Processed from

Based on table 3.1, results of the Pearson correlations between GRDP per

capita, williamson index, and Theil index are 0.064 and 0.227. Pearson

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correlations shows linear trend, but the results are not strong in statistics

because it is not significantly proven at =10%.

3. Leading Sector by Location Quotient (LQ) of East Kalimantan

3.1 Backgrounds

Location quotient (LQ) analysis is a device for gauging the relative specialization

of a region in selected industries (Bendavid-Val, 1991). Location quotient ratio that

provide a convenient way to examine the specialization of economic activity in a region

is basically a way of quantifying how concentrated a particular industry, cluster,

occupation, or demographic group is in a region as compared to the nation.

LQ provides information about (1) what industry the region has and does not have,

(2) the extent to which each industry is under- or overrepresented in the region

compared to the nation (3) the extent to which the region's import of goods and services

can be reduced by production within its area (that is how much import substitution

might be possible) (4) the extent to which the output of its export industries can be

justifiably for export trade enhancement (Kuncoro, 2002). A time series of location

quotients can be computed for relative trend detection (Bendavid-Val, 1991).

3.2. Formula of Location Quotient (LQ)

Formula of Location quotient is an arithmatic computation of ratio between

highlight regional relative productivity consideration i.e. revenues, value added, or

output measures could serve as reference variables.

3.2.1 Static Location Quotient (SLQ)

Folowing two alternative formula of SLQ, for computing a location quotient

(Bendavid, 1972); (Bendavid, 1991); (Kuncoro, 2014):

Xr/RVr Xr/Xn

LQ = ------------------- or LQ = -----------------

Xn/RVn RVr/RVn

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Note:

Xr : Production Value Sector r in the region (Regency)

RVr : Total regional GDP in the region (Regency)

Xn : Production value sector r in the benchmark region (Province)

RVn : Total regional GDP in the benchmark region (Province)

The arithmatic nature of the location quotient leads to the following rules of location

quotient evaluation.

LQ > 1: If the location quotient is greater that 1, the region is more

specialized than the benchmark region (Province) in the study sector.

LQ < 1: If the location quotient is less than 1, the region is less specialized

than the benchmark region (Province) in the study sector.

LQ = 1: If the location quotient is equal to 1, the region and the benchmark

region (province) specialize to an equal degree in the study sector.

3.2.2 Dynamic Location Quotient (DLQ)

DLQ introduces using growth rate by assuming that each value-added sectors as

well as having an average GDP growth rate per year on their own during the period

between the year zero (0) and year t (t). By using the notation gi and Gi will be used to

express the rate of growth of the sector (i) in the area (j) and in the region for

comparison. IPPij is the potential for the development of the sector index (i) in the area

(j) and IPPSi is potential for the development of the sector index (i) in the comparison

area (Kuncoro, 2002).

Formula of Dynamic Location Quotient (DLQ) (Kuncoro, 2002):

LQ > 1: Development of the sector (i) region (j) higher than other areas of

potential growth sectors in the region set, so in the future if the

1

1

1

1

t

ij

j ij

ij

i i

g

g IPPSDLQ

G IPPSG

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situation does not change then the sector can be expected as the sector

ahead of the competition.

LQ < 1: Potential development of the sector (i) region (j) is lower than the

potential development of other sectors in the region set of area. This

situation shows that as long as the situation remains as it is, then in the

future, this sector will not compete with other areas within the sector

the same set.

LQ = 1; Potential development of the sector (i) region (j) is proportional to the

potential development of other sectors in the region set.

3.2.3. Sectoral classification on the basis of comparative analysis

The Leading sector of a districts is when the SLQ > 1 and the DLQ > 1

3.3 Data

Data that have been used in this paper for East Kalimantan cases took from

Kuncoro(2014) forr Gross Domestic Regional Product 1993-2007 and Regional Review

Based on Gross Domestic Product Data Regency / City 2010-2013 Book 3 Kalimantan,

Regional Review Based on Gross Domestic Product Data Regency / City 2009-2012

Book 3 Kalimantan.

3.4. Results of Analysis Using Static Location Quotient (SLQ) and Dynamic

Location Quotient (DLQ)

3.4.1. Paser Municipality

Leading sector for Paser Municipality are:

Live stock, forestry & fishery for 1996, 1998-1999, 2001-2004, 2006-2009,

2012

Mining for 1998, 2000, 2003-2007, 2009-2012.

Services for 1996-1997, 2000-2001, 2004, 2006-2007.

Trade, hotel, and restaurant for 1995-1997, 1999, 2001-2002, 2004

Construction for 1999, 2006,

Finance, real estate, business service for 2000

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3.4.2. West Kutai Municipality

Leading sectors for West Kutai Municipality are:

Live stock, forestry & fishery for 1994, 1996, 2003, 2005, 2006, 2010, and

2012.

Mining for 1994, 1996-1998, 2001-2002, 2004-2012.

Construction for 1994-1995, 1998-2000, 2002-2003, 2005-2006, 2008, 2011.

Trade, hotel, and restaurant for 1994-1997, 2001-2003.

Services for 1994, 1996-1998, 2000-2001, 2004, 2006-2007, 2010.

Finance, real estate, business service for 2001, 2003.

3.4.3. Kutai Kartanegara Municipality

Leading sectors for Kutai Kartanegara Municipality are:

Live stock, forestry & fishery for 1996-1997, 2000, 2003, and 2005.

Mining for 1998, 2001

Construction for 1998, 2004-2005, 2008.

3.4.4. East Kutai Municipality

Leading sectors for East Kutai Municipality are:

Live stock, forestry & fishery for 1997

Mining for 1996-1998, 2003-2007, 2009-2012

Construction for 1998-1999, 2002

3.4.5. Berau Municipality

Leading sectors for Berau Municipality are:

Live stock, forestry & fishery for 1998, 2001, 2003-2007,2009

Mining for 2005-2012

Trade, hotel, and restaurant for 1994-1996, 2001-2001, 2007

Services for 1996, 2000-2007

Transportation and communication for 1996, 1998-2000.

3.4.6. Malinau Municipality

Leading sectors for Malinau Municipality are:

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Live stock, forestry & fishery for1994, 1996-1997.

Electricity, gas, and water supply for 1994-1997, 1999, 2006-2007, 2011-

2012.

Construction for 2002-2006

Trade, hotel, and restaurant for 1994-1996, 2000-2002.

Services for 1996, 2000, 2006.

3.4.7. Bulungan Municipality

Leading sectors for Bulungan Municipality are:

Live stock, forestry & fishery for 1997-1998, 2001-2002, 2006, 2008-2010.

Electricity, gas and water supply for 1995-1998, 2004, 2007-2010, 2012.

Trade, hotel, and restaurant for 1994-1996, 2000, 2009-2010, 2012.

Transport & communication for 2001-2005, 2007, 2010.

Services for 1998, 2000, 2004, 2009-2010.

3.4.8. Nunukan Municipality

Leading sectors for Nunukan Municipality are:

Live stock, forestry & fishery for 2009.

Electricity, gas, water supply for 1998, 2006-2007, 2012.

Construction for 2003-2005.

Trade, hotel, and restaurant for 2000-2003, 2012.

Services for 2002, 2004, 2006.

3.4.9. Balikpapan City

Leading sectors for Balikpapan City are:

Manufacturing industries for 1998, 2000, 2004, 2006-2009.

Electricity, gas, water supply for 1994-1996, 2000, 2003, 2005, 2007, 2010-

2012

Construction for 1995-1996, 1998-2000, 2003-2006, 2008-2012

Trade, hotel, and restaurant for 1994-1995, 1997-1998, 2001-2003, 2009

Finance, real estate, business service for 2000-2002, 2005,

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Services for 1994, 1996, 1998, 2001, 2004, 2006.

Transportation and communication for 1994, 1998, 2002, 2006-2010, 2012

3.4.10. Samarinda City

Leading sectors for Samarinda City are:

Electricity, gas, water for 1995-1996, 1998, 2000, 2008, 2012.

Construction for 1994-1995, 1997-1998, 2003-2007, 2012.

Trade, hotel, and restaurant for 1995-1997, 2001-2005, 2008, 2012.

Transportation and communication for 1997-1998, 2000-2001, 2008-2009.

Finance, real estate, business service for 1994, 1996, 1998, 2000, 2012.

Services for 1997-1998, 2000-2001, 2005-2008, 2012.

3.4.11. Tarakan City

Leading sectors for Tarakan City are:

Live stock, forestry & fishery for 1994, 1996, 2000, -2001, 2003, 2008-2009,

2012.

Electricity, gas, water supply for 1995-1996, 1998, 2000, 2004-2007, 2009.

Construction for 2002-2004.

Trade, hotel, and restaurant for 1994, 2000-2001, 2007, 2012.

Transportation and communication for 1994, 1998-1999, 2006-2009.

Finance, real estate, business service for 1995, 1998, 2000, 2005

Services for 1998, 2001-2009, 2011.

3.4.12. Bontang City

Manufacturing industries for 1997-1998, 2000-2002, 2007, 2009-2012.

Construction for 2005, 2011-2012.

Some districts in East Kalimantan still rely on natural resources such as mining and

quarrying, live stock, forestry and fishery as leading sector in economic. However, the

others start to rely on services and trade, hotel and restaurants sector. Table 3.1 shows

three main leading sectors for each district, weather table 3.2 shows three main districts

for each leading sector.

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Table 3.1 Leading Sectors for Each District

District 3 Leading Sectors from 1994-2012

Paser Livestock, Forestry, &

Fishery

Mining & Quarrying Trade, Hotel and

Restaurant

Services

West Kutai Mining & Quarrying Construction Services

Kutai

Kartanegara

Livestock, Forestry, &

Fishery

Mining &

Quarrying

Construction

East Kutai Mining & Quarrying Construction Livestock, Forestry, &

Fishery

Berau Services Mining &

Quarrying

Livestock, Forestry, &

Fishery

Malinau Electricity, Gas &

Water Supply

Trade, Hotel and

Restaurant

Construction

Bulungan Electricity, Gas &

Water Supply

Livestock, Forestry,

& Fishery

Trade, Hotel and

Restaurant

Transportation &

Communication

Nunukan Trade, Hotel and

Restaurant

Electricity, Gas &

Water Supply

Construction

Services

Balikpapan Construction Electricity, Gas &

Water Supply

Transportation &

Communication

Samarinda Construction Trade, Hotel and

Restaurant

Services

Tarakan

Services

Electricity, Gas &

Water Supply

Livestock, Forestry, &

Fishery

Bontang Manufacturing

Industries Construction

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Table 3.2 Main Districts for Each Leading Sector

Sector 3 Biggest Districts during 1994-2012

Livestock, Forestry, & Fishery Paser, Berau, Bulungan, Tarakan

Mining & Quarriying West Kutai, Paser, East Kutai

Manufacturing Industries Bontang

Electricity, Gas & Water Supply Balikpapan, Bulungan, Tarakan, Malinau

Construction Balikpapan, West Kutai, Samarinda,

Trade, Hotel and Restaurant Samarinda Balikpapan, Bulungan, Paser

Transportation & Communication Balikpapan, Bulungan, Tarakan

Finance, Real Estate, Business Services Samarinda, Tarakan

Services Tarakan, West Kutai, Samarinda, Berau

4. Structural Transformation Index of East Kaliamantan

Economic activities in East Kalimantan can be seen from the relationship between

structural transformation and economic growth. Structural transformation can be

calculated by Structural Information Index (STI), by following formula:

where:

STI = Structural Transformation Index

Share i 1993-2000 =share the component in period before decentralization (year 1993-2000)

Share i 2000-2012 =share the component in period after decentralization (year 2001-2012)

i = 9 sectors that contribute to GRDP

(Kuncoro and Idris, 2010)

Figure 4.1 shows the results of the calculation of STI in East Kalimantan using 9

sectors that contribute to GRDP since 1993 to 2012. The fast structural transformation is

happen in some districts, which are Balikpapan, Nunukan, Pasir, Berau, and the highest

transformation isMalinau. However, only Berau that also gets fast growth of GRDP.

9

2000199320122000

i

ii ShareShareSTI

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Source: Processed from BPS (2013)

Figure 4.1. Structural Transformation Index in East Kalimantan

On the other side, some districts such KutaiTimur, Bontang, Samarinda and Kutai Barat

get high GRDP growth, but in low structural transformation. Kutai Kartanegara,

Tarakan and Bulungan face the low GRDP growth and also low structural

transformation. To see clearer what sector that change in every districts in each

categories, share of 9 sectors to GRDP are tried to be plotted in diagram, as follows:

1. Low GRDP growth and Low Structural Transformation

Kutai Kartanegara,Tarakan and Bulungan are included to low GRDP growth and low

structural transformation category. As figure 4.2, in KutaiKartanegara, since 1993,

mining and quarrying sector give highest sharing to GRDP, without any shifting from

other sectors. Similar to KutaiKartanegara, there is no structural transformation in

Tarakan. Trade, hotel and restaurant sector in Tarakan has highest share to GRDP since

1993 to 2012, as it shown in Figure 4.3.

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Source: Processed from BPS (2013)

Figure 4.2. Share of 9 Sectors to GRDP in KutaiKartanegara (1993-2012)

Source: Processed from BPS (2013)

Figure 4.3. Share of 9 Sectors to GRDP in Tarakan (1993-2012)

Bulungan also categorized as low GRPD growth and low structural transformation

although there is shifting in majority growth sharing from livestock, forestry, and

fishery to mining and quarrying. Start from 2005, mining and quarrying started increase

and surpass livestock, forestry, and fishery sector. The level of structural

transformation, however, is still below the average. The shifting of those sectors can be

seen in figure 4.4.

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Source: Processed from BPS (2013)

Figure 4.4. Share of 9 Sectors to GRDP in Bulungan (1993-2012)

2. High GRDP growth and LowStructural Transformation

Kutai Timur, Kutai Barat, Bontang and Samarindahas economic growth below the

average. However, structural transformation is low. Kutai Timur and Kutai Barat always

suspended to mining and quarrying sectors. They never change the structural since 1993

to 2012, as shown in figure 4.5 and figure 4.6. Coal and gas are the most dominant

mining in Kutai Timur and Kutai Barat.

Source: Processed from BPS (2013)

Figure 4.5. Share of 9 Sectors to GRDP in KutaiTimur (1993-2012)

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Source: Processed from BPS (2013)

Figure 4.6. Share of 9 Sectors to GRDP in Kutai Barat (1993-2012)

Bontang has low structural transformation but in high GRDP growth. From figure

4.7, since 1993 to 2012, manufacturing industries take the highest part in sharing to

GRDP growth. There are manufacturing of liquid natural gas (LNG) and fertilizer

manufacturing plant, PT PupukKaltim, in Bontang that run the economic activities in

surrounded area.

Source: Processed from BPS (2013)

Figure 4.7. Share of 9 Sectors to GRDP in Bontang (1993-2012)

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Figure 4.8 shows Samarinda did structural transformation in 2005, when trade, hotel,

and restaurant sector started increasing, while manufacturing industries decrease

overtime since 1998 to 2012. Although only get low structural transformation, the

growth of GRDP getting high.

Source: Processed from BPS (2013)

Figure 4.8. Share of 9 Sectors to GRDP in Samarinda (1993-2012)

3. Low GRDP growth and High Structural Transformation

The districts that include in this category are Balikpapan, Nunukan, and Malinau.

From figure 4.9, Balikpapan shifting the structure from manufacturing industries to

trade, hotel and restaurant.

Source: Processed from BPS (2013)

Figure 4.9. Share of 9 Sectors to GRDP in Balikpapan (1993-2012)

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Nunukan, as boarders of Indonesia and Malaysia also experience high structural

transformation but still in low economic growth. Livestock, forestry and fishery sector

decrease overtime, the shifted by mining and quarrying sector, as shown in figure 4.10.

This similar condition happen also in Malinau, where livestock, forestry and fishery

decrease sharply, shifted by mining and quarrying, as shown in figure XX.

Source: Processed from BPS (2013)

Figure 4.10. Share of 9 Sectors to GRDP in Nunukan (1993-2012)

5. Conclusion

a. Regions that have GRDP per Capita higher than average GRDP per capita of

East Kalimantan are Bontang, Balikpapan, Kutai Kartanegara, and East Kutai

because their main sectors in that three regions are manufacture, mining and

quarrying.

b. Based on Klassen tipology for 1993-2012, Growth poles in East Kalimantan is

East Kutai and the backward region is in West Kutai, Paser, PPU, Bulungan,

Balikpapan, and Tana Tidung.

c. Both of Williamson index and Entropy Theil index, at the beginning of the

growth of inequality get worse and at subsequent stages inequality decreased,

but at a time the inequality will increase again and finally decreases again. It

proves that East Kalimantan can follow the Kuznets hypothesis

d. The most dominant leading sector in East Kalimantan is mining and quarrying

which located in West Kutai,, East Kutai, and Paser.

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e. The low structural transformation and low GRDP happen in Kutai Kartanegara,

Tarakan and Bulungan.

f. The high structural transformation happen in Malinau, Nunukan, and Balikpapan

that also contribute to high GRDP growth.

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