Economic Diversification and Economic Development

This study explores the benefits of economic diversification as part of Indonesia's ongoing economic transformation, with the aim of reducing dependence on natural resources (SDA). This study uses descriptive and econometric analysis to measure the relationship between the level of economic diversification and socio-economic indicators in various regions. Linear regression and Difference-in-Difference analyses are used to examine the short- and long-term impacts of economic diversification. The results show a significant correlation between economic diversification and long-term socio-economic indicators, such as student enrollment rates at the junior and senior high school levels, while the short-term impacts on per capita expenditure and poverty rates are weaker.

This report is part of a study prepared by Article 33 Indonesia to map strategic issues related to economic diversification in Indonesia. This study examines the impact of diversification on regional economies, with a focus on economic transformation to create a more sustainable economy and reduce dependence on the extractive sector. The methods used, including the calculation of the Herfindahl-Hirschman Index (HHI), provide an overview of how diversified a region's economy is and how diversification can improve socio-economic conditions in the long term.

This report aims to provide deeper insights into potential policies that can accelerate economic diversification at the regional level. For more information on the research findings and proposed policies, please visit the following links.

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