NATIONAL, SECTORAL AND SPATIAL PERSPECTIVES ON TECHNICAL EFFICIENCY AND RETURNS TO SCALE IN INDONESIAN ECONOMY
This paper presents the results of analysis on technical efficiency and return to scale in the Indonesia on the
national, sectoral and spatial perspectives. National analysis was based on a macroeconomics cycles: oil
booming phase (1967-1981), recession phase (1982-1986), deregulation phase (1987-1996), multi-dimension
crisis phase (1997-2001) and economic recovery phase (2002-1013) and the government regime: the New
order (1966-1998) and Reformation governments (1999-2014). Sectoral analysis was based on the 9 sectors
classification, namely: Agriculture, Mining and Quarrying, Manufacturing, Electricity, Gas and Drinking
Water, Construction, Trade, Hotel and Restaurant, Transportation and Communication, Finance, Rental and
Corporate Services, and Services. Spatial analysis focused on seven groups of islands: Sumatera, Java,
Kalimantan, Sulawesi, Bali-Nusa Tenggara, Maluku, and Papua. Cobb Douglass production function was
employed to calculate technical efficiency and return to scale using regression analysis. Data on Gross
Domestic Product, Capital stock and Employment of the year of 1967-2013 used for national analysis, data of
year 1967-2007 for sectoral analysis and data of 1983-2013 for spatial analysis. The results show that firstly,
technical efficiency during the New Order Government was better than those during Reformation
Government. Secondly, those sectors in which the coefficients were above that at the national level,
experienced decreasing returns to scale. On the contrary, those sectors in which the coefficients were below
that at national level, experienced increasing returns to scale. Thirdly, the provinces with coefficients of
technical efficiency below that at national level exhibited increasing returns to scale. Otherwise, the provinces
with coefficients of technical efficiency above that at national level exhibited decreasing returns to scale.
- 0