The Convergence Paradox in Papua, Special Autonomy Transfers, Catch-Up Growth, and Persistent Inequality
DOI:
https://doi.org/10.59976/jebin.v2i1.232Abstract
This study evaluates whether the Special Autonomy Fund (Dana Otonomi Khusus, hereinafter Otsus), distributed over two decades under Law Number 21 of 2001, has successfully reduced economic disparities across 28 districts in Papua province, Indonesia. Using district-level gross regional domestic product (GRDP) per capita data at constant 2010 prices compiled from Statistics Indonesia (BPS) over the period 2002 to 2021, we apply both absolute and conditional beta-convergence regressions alongside sigma-convergence trend analysis. The results reveal a convergence paradox: while absolute beta-convergence is statistically confirmed (β=−0.0127, p<0.01), indicating that economically lagging districts exhibited faster relative growth, sigma-convergence analysis yields the opposite conclusion, as the cross-sectional standard deviation of log GRDP per capita rose monotonically from 1.124 in 2002 to 1.521 in 2021. Conditional beta-convergence incorporating Otsus fund per capita absorption, human development index, and an infrastructure composite index yields an estimated convergence speed of 2.84 percent per year, implying a theoretical half-life of approximately 24.4 years. The coexistence of beta-convergence and sigma-divergence is primarily driven by the structural outlier position of Mimika district, whose GRDP per capita is inflated by Grasberg mining activity, and by the uneven institutional capacity of district governments to absorb and channel fiscal transfers productively. These findings suggest that while Otsus transfers have modestly supported catch-up growth in lagging areas, the fiscal instrument alone has been insufficient to overcome structural inequalities embedded in natural resource geography and institutional gaps.
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