The Big Push and Development: An Inquiry into the Role of the Transport Revolution in Indonesia
Creators: name: Inggrid, Inggrid
Publisher: name: The Australian National University
Year: 2024

description: This thesis consists of three self-contained essays studying how changes in means of transport, harnessed by the realisation of underlying big-push policies, have shaped development outcomes across the Indonesian archipelago. The abstract for each essay is given below. Essay 1: This essay examines the long-term economic impacts of colonial railroads on the contemporary economic development of Java. The Dutch colonists invested in ultra-modern transport technologies of the nineteenth century with the primary aim of bolstering sugar exports from the most lucrative colony of Java to European markets. The colonial railroad system collapsed in post-independence Indonesia due to war damage and poor track maintenance. Utilising a novel dataset on railroads and economic geography of Java collected during and after the colonial period, I find that the eclipse of colonial railroads had positive lingering effects on urbanisation, innovation, entrepreneurship, and nighttime luminosity in modern Java. I further document that historical sunk investments, the mitigation of spatial coordination failures of present-day investments, and human capital accumulation may explain such path dependent effects. Essay 2: To what extent do better roads pose a threat to forests? In this essay, I provide a credible answer to this question in the context of the Trans Papua Highway expansions and deforestation across Indonesian Papua, as one of the largest remaining rainforest areas in the world. The empirical identification relies on quasi-exogenous variation in the timing and placement of the Trans Papua Highway network induced by the introduction of the 2007 New Deal Policy and beyond. My dynamic difference-in-differences estimates show that newly connected villages by the highways experienced substantial forest loss. The effects were short, only lasting for three years after the highway construction. I shed light on four mechanisms that potentially exacerbate the main findings: (i) higher firewood consumption by households, (ii) increased non-agricultural land use (i.e., settlement, industry, and commerce), (iii) developed local markets (TILD), and (iv) enhanced internal migration. Essay 3: (with Budy Resosudarmo) Innovation tends to be unevenly distributed across different regions. There is an ongoing debate in the literature about the exact mechanisms through which an individual inventor can accumulate productive knowledge, including interactions with others who may be located far away. In recent decades, air transport has emerged as the most important mode of long-distance transport worldwide. This study focuses on the role of air services in shaping regional innovation in Indonesia, as measured by patenting activity. We leverage the exogenous airline deregulation in the early 2000s in Indonesia, which resulted in a significant increase in air traffic, to establish the causal impact of changes in airline traffic on the number of regional innovations in the country. By analysing a newly geocoded patent dataset covering Indonesia's municipalities between 1995 and 2016, we find that domestic air passenger traffic has a positive effect on regional patenting. This finding is robust to variations in sample groups and sensitivity tests, indicating that access to air transport can help reduce innovation disparities within a country.