Decentralization and Income Distribution in the Inter-Regional Indonesian Economy

There is an extensive literature that is focused on analytical issues related to income distribution and economic development in developing economies. Two of the more popular approaches have based analysis on the use of social accounting systems and computable general equilibrium models, with the latter models essentially embracing social accounting systems but within a more extensive, economy-wide formulation. The major attraction for these approaches is the essential synergism between the structure of production and the structure of income distribution. In this chapter, this synergism is extended to include the additional dimension of space. Miyazawa's (1966) notions of internal and external multipliers can be extended to a broader analytical scheme in which more extensive feedback mechanisms are explored, in this case through an elaboration of the interregional social accounting system into an interregional computable general equilibrium model.