DEVELOPMENT INEQUALITY  OF DISTRICT/ CITY IN SOUTH SUMATRA   

(2008 - 2015) 

42 

 

DEVELOPMENT INEQUALITY  OF DISTRICT/ CITY 

 IN SOUTH SUMATRA  ( 2008 - 2015)  

Siti Rohima 1*4 

1 Universitas Sriwijaya, Palembang, Indonesia 

Abstract 

This study aims to determine the effect of PAD, DAU, regional expenditure and 

economic growth to the development gaps in the province of South Sumatra. 

The data used is secondary data in the GRDP, regional expenditure, PAD and 

DAU per district / city in the period 2008- 2015. In this study, using a 

quantitative approach. Technical analysis of using Williamson index 

calculation and linear regression. These results indicate that the PAD and 

Expenditure have a positive effect, on the contrary DAU and economic growth 

have a significant negative effect on the development gaps District / City in the 

province of South Sumatra. 

JEL Classification: H70, H77, O10 

Keywords: DAU, Development inquality, Economic Growth, PAD, Regional 

Expenditure  

1. INTRODUCTION 
Development is defined as a multidimensional process that involves a 

variety of fundamental changes in the social structure, social behavior, and 

social institutions, in addition to the acceleration of economic growth, equitable 

distribution of income inequality, and poverty eradication (Todaro, 2007). 

Therefore, the purpose of the construction itself is to improve the welfare of the 

community. In improving people's welfare required increased economic growth 

and equitable distribution of income. Rapid economic growth is not matched by 

equity, will lead to disparity. 

South Sumatra province has a fairly high economic growth, but also can 

not be separated from development gaps. This is reflected in the GRDP district 

and the city of South Sumatra Province are very different. There are several 

areas of the city has GRDP rate relatively high, and there are some parts of the 

district that has a level of development of the GRDP is quite low. One measure 

of the achievement of the development is to look at the Gross Regional 

Domestic Product (GRDP) owned. The GRDP figures as well as a comparison 

of the achievements of development across the country. The greater value of 

GRDP of a region depict the economic level achieved. In addition it also as an 

evaluation of development that has been achieved. 

The highest economic growth is Pagaralam city amounted to 446, 58%, 

the second highest is Prabumulih amounted to 349.64%, and the third is Lubuk 

Linggau amounted to 291.84%. The lowest economic growth is Empat Lawang 

12.32%, the second lowest is Banyuasin district amounted to 76.20%, and the 

third lowest is the Musi Rawas amounted to 79.32%. This condition can be seen 

in the following figure: 

 

                                                           
* Corresponding author. Email address: sitirohima@unsri.ac.id  

mailto:sitirohima@unsri.ac.id


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Figure 1 Economic Growth District / City 

Source: Data processed, 2016 

Based on Figure 1 which shows the economic growth through the 

realization of GRDP at constant 2000 prices come into force during the years 

2004 to 2013 has fluctuated, during the 2004-2009 period, the city of Palembang 

who occupied the highest positions, but during 2010-2013 Musi Banyuasin who 

occupy the highest position , Based on descriptive statistics table the average 

rate of economic growth in South Sumatra province amounted to 0.068027 

(7%), with the highest value is Palembang amounted to 0.275665 (28%) in 2009 

and the lowest value is Pagaralam by 0, 009 465 (9%) occurred in 2009, as well 

as the standard deviation of 0.060505 (6%). 

Development gaps between regions is a common aspect in economic 

activity in a region. This inequality is basically caused by the difference in the 

content of natural resources and differences in geography contained in each 

region. As a result of this difference, the ability of an area to encourage the 

development process also becomes different. Therefore, it is not surprising 

when in any area there is usually a forward region (Development Region) and 

underdeveloped region (underdevelopment Region).In addition, the disparity 

can be seen from several aspects of fiscal imbalances. It can be seen from the 

locally generated revenue (PAD), DAU and Expenditure different in each 

district / city. This condition will contribute and implications for the level of 

social welfare. If this situation continues, then the imbalance of development 

will be increased and equitable development will not be realized in the province 

of South Sumatra.  

Issues 

How the influence of locally generated revenue (PAD), general allocation 

fund (DAU), Regional Expenditure and Economic Growth to the development 

inquality in the province of South Sumatra? 

 

2. LITERATURE REVIEW 
1. Inequality of Regional Development 

One of the goals of regional economic development is to reduce the 

inequality (disparity). The increase in per capita income does indicate the level 

of economic progress of the region. But the increase in income per capita does 

not always indicate that a more equitable distribution of income. Often in 

developing countries into the economy over emphasize the use of capital than 



DEVELOPMENT INEQUALITY  OF DISTRICT/ CITY IN SOUTH SUMATRA   

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on labor so that the advantage of the economy is only enjoyed by some 

community members. If it turns out the national income are not enjoyed equally 

by all levels of society, it can be said that there has been inequality. There are 

several forms of imbalance in regional development. 

  

2.Regional Income Disparities 

Inequality is not only on the distribution of public revenues, but also 

occurs on development between regions in the territory of a country. Jeffrey G. 

Williamson (1965) examined the relationship between regional disparities in 

levels of economic development, using economic data and the developed 

countries that are developing. It was found that during the early stages of 

development, regional disparity becomes greater and development concentrated 

in certain areas. At this stage a more "mature", judging from economic growth, 

it appears the balance between the regions and the disparity is reduced 

significantly. Williamson uses Williamson Index (Williamson) to measure the 

inequality of development among regions. Williamson index using the GRDP 

per capita as a baseline. 

Figures Williamson index coefficient is 0 <IW <1. If the index gets 

smaller Williamson or close to zero indicate that the smaller imbalance or 

otherwise more evenly and greater numbers indicate inequality widened. 

Although this index has a weakness that is sensitive to the definitions used in 

the calculation region means that if the size of the area used is different it will 

affect the results, but quite commonly used measure of inequality of 

development among regions. 

 

3. Causes of Inequality of regional Development  

The process of accumulation and mobilization of resources, such as 

capital accumulation, inequality of labor, and natural resources are owned by 

the region is the trigger in the region's economic growth rate is concerned 

(Riadi, 2007). Heterogeneity and diverse characteristics of an area leads to a 

tendency imbalance between regions and between sectors of the economy of a 

region. Based on the fact that, inequality / disparity between regions is the 

logical consequence of development and a step change in the development 

itself.  

According to Myrdal (1957), differences in the level of economic 

development between regions overload will cause an adverse effect (backwash 

effects) dominated the beneficial effects (spread effects) on the growth of the 

area, in this case resulted in the imbalance. Actors who have the power in a 

normal market will tend to increase rather than decrease, resulting in inequality 

between regions (Arsyad, 1999, in Pakpahan, 2009). As for the factors of 

inequality of development among regions (Manik, 2009), namely: 

a. Differences content of natural resources  
b. Differences Demographic Conditions  
c. Less Smooth Mobility Goods and Services  
d. The concentration differences of Regional Economic Activity 
e. Inter-regional Development Fund Allocation 

 

4. Growth Theory 

Development is a process of transformation in the course of time is 

marked by changes strktural that changes in economic activity and the 



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foundation framework of economic structure of the community. In general, 

development is always accompanied by the growth, but growth is not 

necessarily accompanied by the development. At the beginning level, economic 

development accompanied by the growth and vice versa (Irawan and 

Suparmoko, 1988). 

Neo-Classical Model adherents in Sjafrizal (2008) argues that the 

mobility of factors of production, both capital and labor, at the beginning of the 

development process is less smooth. As a result, at the time of capital and 

skilled manpower tend to be concentrated in the more advanced so that the 

regional development gaps tend to widen (divergence). However, if the 

development process continues, with improvements in the infrastructure and 

communication facilities then the mobility of capital and labor will be more 

smoothly. Thus, later after the country concerned has advanced the regional 

development gaps will be reduced (Convergence).   

Endogenous growth models developed to complement the theory of neo-

classical economic growth. Endogenous growth theory was originally 

developed in two branches of thought which is based on the importance of 

human resources as a key element in the economy (Capello, 2007). According 

to Simon Kuznets in Kuncoro (2006) hypothesized the inverted U curve 

(Inverted U Curve) that initially when construction began, the income 

distribution will be more unequal, but after reaching a certain level of 

development, more equitable income distribution.    

Musgrave and Rostow in Mangkunsoebroto (1998), developed a model of 

the development of government spending, which connects the development of 

government spending with the stages of economic development. The 

development of state expenditures in line with the stage of economic 

development of the country. In the early stages of economic development 

required a large state spending for public investments, mainly to provide 

infrastructure. At the intermediate stage of economic development, investment 

is still required for economic growth, but private sector investment is expected 

to have already begun. In advanced stages of economic development, 

government spending is still needed, particularly to improve the welfare of the 

community. 

 

5. Locally Generated Revenue (PAD) 

Local revenue is revenue derived from various sectors of local taxes, 

levies, local owned company results, the results of seperated regional wealth 

management, and other legitimate local revenue (Mardiasmo, 2502). According 

to Law No. 33 of 2004 on the financial balance, the local revenue or PAD is a 

local earned income levied by local regulations in accordance with the 

legislation. PAD aims to give authority to local governments to be able to fund 

their own regional autonomy in accordance with the region's potential as an 

embodiment of decentralization. 

The main characteristic that indicates a region capable of autonomous 

autonomy lies in the area of financial capability, which means the autonomous 

region must have the authority and ability to dig their own financial resources, 

manage and use their own finances are sufficient to finance the organization of 

local governments. In an effort to increase the revenue potential, then an area is 

prohibited: 

a. Set rules about revenue which leads to a high cost economy, and 



DEVELOPMENT INEQUALITY  OF DISTRICT/ CITY IN SOUTH SUMATRA   

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b. Establish regional regulations that inhibit the income mobility of the 
population, the traffic of goods and services between regions, and import / 

export activities. 

 Under Law No. 33 of 2004 on the financial balance, revenue derived 

from: (1) local taxes, (2) Levies, (3) Results of Regional Wealth  Management 

separated, and (4) Other PAD legitimate. 

 

6. General Allocation Fund (DAU) 

DAU is the block grant given to all counties and cities for the purpose of 

filling the gap between capacity and fiscal needs and distributed by a formula 

based on certain principles that generally indicates that the poor and backward 

areas should receive more than poorer areas.  

According to Ma (1997 in Hamid: 2005) said there are three reasons to 

have allocation (transfer) between the government: (1) there is a vertical 

imbalances (vertical fiscal imbalance), (2) the existence of horizontal fiscal 

imbalances (horizontal fiscal imbalance) that is the difference kabutuhan fiscal 

and fiscal capacity between regions, (3) the effects of inter-regional delegation 

(spill over effect), namely the economic externalities and diseconomies of an 

activity in an area on the other area. 

Under Law no. 33 In 2004, the central government transfers to the District 

and the City in the form of General Allocation Fund (DAU) and Special 

Allocation Fund (DAK). In the definition of general allocation funds can be 

interpreted as follows: (Sidik in Kuncoro, 2004), namely: 

1. One of the components of the balance funds in the state budget is based on 
the concept of fiscal pengalokasiann gap or fiscal gap is the difference 

between fiscal needs and fiscal capacity.  

2. Instruments to address horizontal imbalance, which is allocated for the 
equitable distribution of financial capability among the areas where the user 

is determined entirely by the region. 

3. Equalition grant, Which serves to neutralize the ability of regional financial 
imbalances in the presence of PAD, Tax Revenue and Profit Sharing 

obtained SDA area. 

In reducing fiscal imbalances to the financing needs and the taxation 

between center and regions have coped with the financial balance between the 

central and regional (DAU policies for results and a minimum of 25% of 

domestic revenue). DAU will provide capacity for the region in obtaining the 

financial resources to finance the expenditure needs which it is responsible 

(Khusaini, 2006). 

Factors to be considered by the DAU formula is the variable needs of the 

region and the economic potential of the region. Reflect local needs of regional 

spending with a variable number of population, area, geography and income 

levels to pay attention to the poor. While the economic potential of the region 

is reflected by the revenue potential areas such as PAD, SDA, Non SDA and 

the DAU. 

 

3. RESEARCH METHODS 
1.   The Scope of Research 

Research on the analysis of the financial performance of the district / 

city in South Sumatra province using quantitative research methods. The data 

used is the data the GRDP, regional expenditure, PAD and DAU per district / 



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city in South Sumatra province in the period 2008- 2015.This study uses an 

index wiiliamson and multiple linear regression analysis model with the scope 

of the 15 districts / cities in South Sumatra Province period 2008-2015.   

 

2. Data Analysis 

This study used quantitative analysis techniques. This study uses analysis 

techniques 

1. Williamson Index 
Basically Williamson index is the coefficient of dispersion (coefficient 

of variation) of the average value calculated based on the estimated 

distribution of the values of the regional expenditure and population areas 

that are in the scope of areas to be studied and analyzed. Calculation basis is 

to use the revenue share per capita in relation to the total population. The 

higher the index value Williamson then the discrepancy between regions will 

be even greater (Kuncoro, 2004). 

The Williamson index calculation formula is: 

( )

Y

n
Y

=

k

=i


1

2 fi
Yi

IW                                                                  ................ (1)              

Information: 

IW: Williamson Index   

Yi: GRDP per capita in the district / city i   

Ŷ: average GRDP per capita in the province   

Fi: The population of the district / city i   

n: The number of residents in the province of South Sumatra   

i: 1,2, ... ..   

k: The number of districts / cities                 0 ≤ IW ≤1 

 so the higher williamson index, the higher the inequality between districts / 

cities. 

 

Multiple Linear Regression Analysis                                           

In analyzing the effect of economic growth, PAD and DAU to 

development gaps used test equipment in the form of descriptive statistical 

analysis, regression analysis and hypothesis testing. Multiple linear regression 

analysis to measure whether the dependent variable is really determined by the 

independent variables with the method of Least Squares (LS). 

As for the model equations used in this study are:  

IW = ɑ + β1 PADit + β2DAUit + β3 β4 BD + PE + etit                  ................ (2) 

Information : 

IW     = Inequality Development 

ɑ, β        = coefficient 

PE     = Growth in region i in year t   

PAD      = Locally Generated Revenue in region i in year t 

DAU    = General Allocation Fund  The region i in year t 

BD    =  Regional Expenditure  

etir    =  error term 

 

 

 



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4. RESULT AND DISCUSSION  

Inequality Development District / City in the province of South Sumatra 

South Sumatra is one of the provinces in Indonesia, located in the southern 

part of the island of Sumatra. The province thousands of cities in Palembang. 

Geographically, South Sumatra Province is situated between 1 degree to 4 

degrees south and 102 degrees to 106 degrees east longitude with a wide area 

entirely 87017.41 km2 and is bordered by the province of Jambi in northern 

province of Kep. Bangka Belitung in the eastern province of Lampung in the 

south, and the province of Bengkulu on the west. 

Administratively South Sumatra province consists of 15 districts and the 

City Government. The province is rich in natural resources, such as petroleum, 

natural gas, and coal. Different natural resources and the ability and financial 

performance of different areas in the district / city influence developments in 

South Sumatra province. 

Development gaps between regions and between the regions with the 

central one to the other is a natural thing, because of the differences in resources 

and the early implementation of development across the country. This 

imbalance was initially caused by the difference in the content of the natural 

resources and differences in demographic conditions contained in each - each 

region. As a result of this difference, the ability of a region to promote economic 

growth and encourage the development process also becomes different. The 

most commonly discussed inequality is economic disparity. Economic 

development gaps between regions in absolute terms and relative imbalance 

between the potential and the welfare of the implications for social welfare in 

the region concerned and the problems in the relationship between the regions. 

This implication is typically generated in the form of jealousy and discontent 

communities can also continue with political implications and public 

tranquility. Therefore, this aspect of economic development disparity between 

regions needs to be addressed through the formulation of regional development 

policies undertaken by local governments. 

South Sumatra province with 15 districts / cities spreading and potentially 

diverse. These potential differences may affect the development of the district 

or the city. Based on the index value calculation Williamson South Sumatra 

province in 2009- 2015, the district has tertinggai ketimpang level is Musi 

Banyuasin is 0.736. Basically fluctuated in the range of 0.777 to 0.947. When 

in view of the inequality district and the city's largest inequality figures 

contained in Musi Banyuasin which in 2015 reached the figure of 0.947 

inequality. Then, the second inequality occupied by the city of Palembang in 

2015 reached the figure of 0376. While the index of inequality based on 

Williamson's most Musi Rawas lowest in the North with a rate of 0,103 in 2015. 

The condition of fluctuations in regency / city inequality can be seen in the 

following figure. 

 

 

 

 



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Figure 2 Development of Inequality in South Sumatra Province 

Source: Data processed, 2016 

From the graph above is known developments Williamson index 

contained in the province of South Sumatra and its counties and cities from the 

year 2006-2015 is fluctuating or increasing and decreasing every year. 

Inequality Development in South Sumatra Province from the difference in 

economic growth in various sectors. Based on the results of the index 

calculation can dikethui tngkat Williamson inequality in South Sumatra 

province, as can be seen in Table 1. Inequality Index by Williamson in 2006 

lowest inequality level when compared with the years that followed that with a 

rate of 0.818. While in 2010 the numbers rose to 1.032 inequality and dropped 

back to the year 2013 but still in the high inequality figures. While in 2014 and 

2015 the rate of inequality in South Sumatra Province continued to increase 

which amounted to 1.078 and 1.204. 

Table 1 Development Disparities District / City in South Sumatra Province 

Year         IW 

2009 0,951 

2010 0,941 

2011 1,032 

2012 0,959 

2013 0,935 

2014 1,078 

2015 1,204 

Average .980 

 

Overall, the spatial inequality in South Sumatra province along with 

District and State is very high because the value of the index williamson South 

Sumatra province and its Districts and Cities close to 1 even there that exceeds 

1. This indicates a relatively high level of inequality. One contributing factor is 

the enactment of the regional autonomy system in the province of South 

Sumatra, especially in 2003, namely the expansion area so there are new 

districts / cities with new potential for the city of Lubuk Linggau, Banyuasin 

district, the city of Pagar Alam and Prabumulih. 

The potential of the natural resources of a region will affect the reception 

and the local finance. An area that has a lot of oil, gas and other natural potential 

tend to have more advanced development than areas that have oil and gas 



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50 

 

potential slightly so that a reasonable case of inequality between regions. In 

addition to the number of population and the low per capita income inequality 

is another factor causing the expansion of new districts so that the economic 

conditions of the new district is not adequate structuring and financial needs in 

the area to explore the potential as a source of revenue. The potential of different 

natural resources owned by the region may lead to imbalances between regions 

as more and more natural resources are owned it for greater results, whereas a 

poor area of natural resources. Efforts are being made that the DAU transfer 

administration of the regional center. This transfer is given to reduce the fiscal 

imbalance that occurs, especially for areas that lack natural resources. Efforts 

are made with the transfer of DAU from the central to the region. This transfer 

is given to reduce fiscal imbalances that occur, especially for areas with 

minimal natural resources (SDA). 

 

REPRESENTATION: 

Y = 0.234547269921 + 8.0726528297208X1 - 2.871049257507X2 – 

       0.000193190577511  X3 + 1.226597073709  X4 

➢ CONSTANTS = 0.234547269921 
➢ COEFFICIENT 

- β1 (PAD) = 8.0726528297208    
- β2 (DAU) = - 2.871049257507  
- β3 (PE) = - 0.000193190577511    
- β4 (BD) = 1.226597073709   

 

Based on calculations performed, that: 

Variable PAD has a significant positive relationship with development 

gaps Where if PAD increased by 8.0726528297208, then the discrepancy 

region will also be increased by 8.0726528297208, with the assumption of 

increasing economic growth so that PAD can be distributed evenly. 

Furthermore, variable DAU has a significant negative correlation with 

development gaps. Where if DAU increased by 2.871049257507, then the 

discrepancy region will decrease by 2.871049257507. 

Results of the calculations stated PE has significant negative correlation 

with development gaps. Where if PE is increased by 0.000193190577511 will 

cause a decrease in the level of inequality region of 0.000193190577511. 

Similarly, the variable SW has a significant positive relationship with 

development gaps. Where if BD-09 increased by 1.2265970737 the imbalance 

development of the region also increased by 1.226597073709. Because the area 

allocated expenditure indicates the amount of improvement that should be 

corrected in the area, so that the more unequal a region, the greater the 

expenditure incurred area but this does not guarantee a more equitable 

distribution of shopping areas throughout the district there. 

 

Hypothesis testing 

Hypothesis testing is done to see whether there is a direct influence of the 

independent variables on the dependent variable either partially or 

simultaneously (together). As for which is used to test hypotheses, namely: 

 

 

 



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Simultaneous Test (F-Test) 

 F test was used to test whether the independent variables affect 

simultaneously / together against the dependent variable, ie by comparing the 

F-statistic with F-table 

 

Variable Coefficient Std. Error T-Statistic Prob. 

C 0.234547 0.021465 10.92682 0.0000 

X1 8.07008 1.37008 5.892879 0.0000 

X2 -2.87007 3.20008 -8.975939 0.0000 

X3 -0.000193 5.48005 -3.526724 0.0007 

X4 1.23009 2.89010 4.248165 0.0001 

From the ANOVA table can be obtained significance value of 0.000 F test 

where this value is less than 0.05 then the results obtained with the level of 

significance is Ho was rejected and the conclusion there is significant influence 

simultaneously from PAD, DAU, Economic Growth and Expenditure against 

inequality of development. 

 

Partial test (t-TEST) 

This test is used to test whether a partial effect of independent variables 

on the dependent variable, namely by comparing each value of t-statistic of 

regression with t-table. 

Variable Coefficient Std. Error t-Statistic Prob. 

C 0.234547 0.021465 10.92682 0.0000 

PAD 8.07008 1.37008 5.892879 0.0000 

DAU -2.87007 3.20008 -8.975939 0.0000 

PE -0.000193 5.48005 -3.526724 0.0007 

BD 1.23009 2.89010 4.248165 0.0001 

 

Assessment of the effect of PAD to Regional development Imbalances 

partially. At the output estimation results by using e-views with methodPanel 

EGLS (Cross-section weights) found that the number of significance for the 

variable revenue of 0,000. Due to the significance value less than 0.05 then the 

results obtained with the level of significance is Ho is rejected and the 

conclusion there is significant influence partially from PAD to Regional 

Development Disparities in the district of Se-South Sumatra. 

Assessment of the effect of the DAU to partially Regional Disparities. At 

the output estimation results by using e-views with Panel method EGLS (Cross-

section weights) found that the number of significance for variable DAU 0,000. 

Due to the significance value less than 0.05 then the results obtained with the 

level of significance is Ho is rejected and the conclusion there is significant 

influence partially from the DAU to the Regional Disparities in the district of 

South Sumatra. 

Testing the effect of economic growth on Regional Imbalances partially. 

At the output estimation results by using e-views with Panel method EGLS 

(Cross-section weights) found that the number of significance for Economic 

Growth variable of 0.000. Due to the significance value less than 0.05 then the 

results obtained with the level of significance is Ho is rejected and the 

conclusion there is significant influence partially on the Growth of the Regional 

Disparities in the district of South Sumatra. 



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Testing the influence of local expenditure on Regional Imbalances 

partially. At the output estimation results by using e-views with methodPanel 

EGLS (Cross-section weights) found that the number of significance for local 

expenditure variable of 0.000. Due to the significance value less than 0.05 then 

the results obtained with the level of significance is Ho is rejected and the 

conclusion there is significant influence partially from local expenditure on 

Regional Imbalances in the district of South Sumatra. 

 

Analysis of Effect of PAD, DAU, Economic Growth and Expenditure 

Against Inequality Development 

PAD has a significant positive relationship with the regional development 

imbalances. Where if PAD increased by8.07265282972, then the discrepancy 

region will also be increased by 8.07265282972. Based on the results of this 

calculation means Ho rejected in other words there is a significant and positive 

effect partially from PAD to Regional Development Disparities in the district 

of Se-South Sumatra. The higher revenue of a district / city will increase 

development in the region. If this condition is not offset by an increase in 

revenue from other districts / municipalities will cause an increase in inequality. 

According to research conducted by Koswara (2006) that the imbalance will 

occur if supported equitable income distribution. Equitable distribution 

provides the opportunity for society as a whole to enjoy development. This 

condition will increase per capita income and the community can participate in 

the development.   

DAU has a significant negative correlation with development gaps. 

Where if DAU increased by 2.8710492575, then inequality will decrease by 

2.8710492575 region. DAU provides financial assistance to regions mainly 

lack of funds for development activities. So if there is an increase in the DAU 

can reduce inequality. This condition is in line with research conducted Sukarno 

(2008) that DAU significant impact on the reduction of inequality such as 

income per capita. In addition, the necessary monitoring and setting standards 

that the use of general allocation funds right on the goal of decentralization is 

far local fiscal gap that ultimately reduce income inequality. In addition DAU / 

APBD significant impact on the reduction of inequality such as income per 

capita. 

An area that progress will be more advanced and lagging regions will be 

left behind, this is due to differences of capital, labor, skills, technology, and 

public facilities are different in each region. In terms of capital, the capital in 

the area of advanced tersedian certainly more due to the rapid economic 

development is clear that there is also high turnover thus increasing the income 

of people in the area. In accordance with economic laws that increased revenues 

will increase consumption and private savings, and increase public savings to 

be the cause of a large capital investment in the area. In the area behind the 

sluggish economy the public revenue will be small so small that people's 

savings also resulted in the amount of capital available too small, not even rule 

out the little capital will be used by economic operators in developed regions. 

In terms of labor, wage level differences developed areas with underdeveloped 

areas would automatically lead to the displacement of labor from 

underdeveloped areas to developed areas heading for a higher income, thus 

lagging regions will lose its workforce. This is evidenced by the efforts made 

by many developed regions in order to stem the tide of urbanization is not 



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successful. In terms of skills and technology, in developed regions with so high 

level of competition to encourage people in the area to improve their skills and 

develop the technology that will support the economic activities of businesses 

that would be more superior than an entrepreneur to another, then businesses 

are lagging automatically do not want to lose the competition thus looking for 

ways to improve their skills and tekonologinya, and this condition continues. 

While in the lagging regions will take place conditions of stagnation, with a 

mindset that does not want to accept change is not impossible that the region 

will suffer a setback. 

Furthermore, economic growth 0,000. Due to the significance value less 

than 0.05 then the results obtained with the level of significance is Ho is rejected 

and the conclusions are negative and significant effect on the Economic Growth 

Disparities in the Development District / City of South Sumatra province.Along 

Kuswara study (2006) on linkage analysis of economic growth and unequal 

distribution of income in the province of South Sumatra shows that income 

distribution between districts / cities in South Sumatra province during 2000-

2005 by entering the oil and gas factor tends to be skewed, while the unequal 

distribution of income between districts / city in South Sumatra relatively well 

without oil and gas. Relations unequal distribution of income and economic 

growth of oil and gas in South Sumatra is the higher economic growth, the lower 

the degree of inequality of income distribution, which means it tends to follow 

the neoclassical hypothesis, 

Regional expenditure has a significant positive relationship with 

development gaps. Where if the local expenditure increased by 1.2265970737, 

then the imbalance development of the region also increased by 1.2265970737. 

Because the area allocated expenditure indicates the amount of improvement 

that should be corrected in the area, so that the more unequal a region, the 

greater the expenditure incurred area but this does not guarantee a more 

equitable distribution of regional expenditure throughout the district there. 

Overall it can be said that the PAD, DAU, Local Expenditure and 

Economic Growth also influence the development gaps district / city in South 

Sumatra province. Necessary that regional governments can minimize the 

occurrence of these imbalances, so that development tends to be evenly and 

well-being can be improved. 

 

5. CONCLUSION 
From a series of discussions about the regional development 

imbalances, the government's role in addressing regional development 

imbalances through government spending, and the influence of economic 

growth on development gaps. 

Based on the index value calculation Williamson South Sumatra 

province in 2009- 2015, the district has the highest inequality level is Musi 

Banyuasin is 0.736. Basically fluctuated in the range of 0.777 to 0.947. When 

in view of the inequality district and the city's largest inequality figures 

contained in Musi Banyuasin which in 2015 reached the figure of 0.947 

inequality. Then, the second inequality occupied by the city of Palembang in 

2015 reached the figure of 0376. While the index of inequality based on 

Williamson's most Musi Rawas lowest in the North with a rate of 0.103 in 

2015. 



DEVELOPMENT INEQUALITY  OF DISTRICT/ CITY IN SOUTH SUMATRA   

(2008 - 2015) 

54 

 

Partially PAD and Expenditure positive and significant impact on 

Inequality Development District / City in the province of South Sumatra. 

While DAU significant negative effect on the development Inequality 

Regency / City in the province of South Sumatra. As the need to control and 

setting standards that the use of general allocation funds right on the goal of 

decentralization is far local fiscal gap that ultimately minimize income gaps. 

Similarly, Economic Growth has a negative and significant impact to the 

development gaps Regency / City in the province of South Sumatra. 

In general it can be said that the PAD, DAU, Regional Expenditure and 

Economic Growth positive and significant impact on Inequality Development 

District / City in the province of South Sumatra. 

Suggestions 

1. The need for serious government attention to resolve the problems related 
to the economy, especially for distributing development and the GRDP 

per capita of the population in the existing district or region. One way is 

to increase the economic activities or economic centers in the region 

through the empowerment of community economic activities. 

2. Consolidation between regions or districts with the provincial 
administration necessary for the implementation of development can be 

carried out thoroughly so that equitable development can be achieved and 

inequality on economic development can be minimized. 

 

 

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