[FKP at Article 33] Is There a Natural Resource Curse in the Municipalities and Cities of Indonesia?

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An indication of poor economic performance in municipalities/districts with abundant natural resources has set Berly Martawardaya, Triyono Basuki and M. Fadli H to investigate the occurrence of natural resource curse phenomenon at the local level in Indonesia. At the second FKP hosted by Article 33 on 30 July 2015, the authors presented their research findings which confirmed the hypothesis.

The study contribution lies heavily on its usage of big panel data set for 2006-2012 and more detailed control factors. Three different empirical models which are set to investigate relation between natural income with economic growth, poverty rate, and human development index (HDI) were used. To confirm the outcome of its regression results, authors investigated the relation using the Granger causality technique—though only for 20% richest municipalities/districts on sample—and found similar results. The authors found no significant relation between natural resource reserve income and economic growth, poverty rate, or human development index (HDI).

The authors recommended three ways with which government could minimize the impact of local resource curse in Indonesia. First, reduce dependence on natural resource and try to boost other non-natural resources revenue; second, use natural resource revenue to fund activities that increase growth and HDI, lower poverty, and strengthen institutional capacity; third, do further study of natural resource fund that earmark natural resource revenue for activities that has long term economic impact and diversified income sources.

Watch the video: Part 1, Part 2

Presentation file: FKP 30 July 2015 Martawardaya et al Is there a natural resource curse in Indonesia

Lydia Napitupulu

http://asiapacific.anu.edu.au/blogs/indonesiaproject/fkp-30-july-2015-is-there-a-natural-resource-curse-in-the-municipalities-and-cities-of-indonesia/

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