The Annals of Regional Science

, Volume 54, Issue 1, pp 89–115 | Cite as

Determining optimal location of new growth centers based on LGP–IRIO model to reduce regional disparity in Indonesia

  • Didit Okta Pribadi
  • Andi Syah Putra
  • Ernan Rustiadi
Original Paper


Development policy that mainly focuses on economic growth has triggered increasing regional disparity in Indonesia, exacerbated by the concentrated development of growth centers that generate backwash effects rather than spillover effects. Balanced regional development is needed and can be initiated through a spatial system approach, where the growth centers and their hinterlands are developed simultaneously as an integrated system. The aim of this research is to define new growth centers that can stimulate the optimal utilization and interaction between regional resources for generating more balanced and efficient development. Three interrelated models are developed to address this: (1) an inter-regional input–output (IRIO) optimization model to generate optimal resource use and improve development performances, (2) a transport model to determine an optimal inter-regional input–output network, and (3) a P-median model to define new growth centers and their hinterland areas. Results from the first model show that setting land resource limitations, demand compliance, and goals to increase economic growth, people’s income, and government tax can create higher and equally distributed value of total output. The second model indicated that the optimal flow of input–output increased intensity of economic transaction among provinces, although it was still dominated by interaction between Java and Sumatra. The third model identified seven new growth centers comprising Medan, Tanjungpinang, Palembang, Balikpapan, Gorontalo, Makassar, and Ternate.

JEL Classification

R12 R15 



The research is funded by the Ministry of Culture and Education Republic of Indonesia through National Strategic Competitive Research Program Year 2010. The authors are grateful to Dr H. R. Sunsun Saefulhakim from Department of Soil Science and Land Resource Management, Bogor Agricultural University, for his bright idea in initiating the development of the model, and the international anonymous referees for valuable comments on an earlier version of this article.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Didit Okta Pribadi
    • 1
    • 2
  • Andi Syah Putra
    • 1
  • Ernan Rustiadi
    • 1
    • 3
  1. 1.Center for Regional Systems Analysis Planning and Development (CRESTPENT/P4W) Bogor Agricultural UniversityBogorIndonesia
  2. 2.Indonesian Institute of ScienceBogorIndonesia
  3. 3.Department of Soil Sciences and Land ResourcesBogor Agricultural UniversityBogorIndonesia

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