International Development Planning Review

Joint action in action? Local economic development forums and industry cluster development in Central Java, Indonesia

International Development Planning Review (2016), 38, (4), 425–448.

Abstract

It has been argued that the growth potential of industry clusters in developing countries is dependent on joint action to release external economy effects that otherwise remain latent. In this paper we report on the progress and impacts of a programme in Central Java to develop the capacity for joint action in industry clusters via economic forums in local government jurisdictions. We focus on the emerging relationships between industry clusters and their respective economic forums in four local government jurisdictions. Despite progress, the findings reveal the difficulties of developing new institutions to support joint action. These difficulties follow from the limits presented by the private sector dynamics underlying industry clusters and from variations in local government organisation, resourcing and understandings of the remit of these new institutions.

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Altenburg, T. and Meyer-Stamer, J. (1999) ‘How to promote clusters: policy experiences from Latin America’, World Development, 27, 1693–713. How to promote clusters: policy experiences from Latin America World Development 27 1693 713 Google Scholar

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GTZ (2008) Rattan furniture value chain promotion in the Solo region, Central Java Indonesia, Jakarta, GTZ. Google Scholar

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Nichter, S. and Goldmark, L. (2009) ‘Small firm growth in developing countries’, World Development, 37, 1453–64. Small firm growth in developing countries World Development 37 1453 64 Google Scholar

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P5 Universitas Diponegoro (2013) Laporan Kegiatan Monitoring and Evaluasi: Pengembangan Ekonomi Lokal (PEL) Provinsi Jawa Tengah, Semarang, P5 Universitas Diponegoro. Google Scholar

P5 Universitas Diponegoro (2014) Pedoman Umum FEDEP, Semarang, P5 Universitas Diponegoro. Google Scholar

Perlin, F. (1983) ‘Proto-industrialization and pre-colonial South Asia’, Past and Present, 98, 30–95. Proto-industrialization and pre-colonial South Asia Past and Present 98 30 95 Google Scholar

Perry. M. (2005) ‘Business clusters in the south: a critical appraisal from Indonesian evidence’, Singapore Journal of Tropical Geography, 26, 227–43. Business clusters in the south: a critical appraisal from Indonesian evidence Singapore Journal of Tropical Geography 26 227 43 Google Scholar

Phelps, N. A. (1992) ‘External economies, agglomeration and flexible accumulation’, Transactions of the Institute of British Geographers, 17, 35–46. External economies, agglomeration and flexible accumulation Transactions of the Institute of British Geographers 17 35 46 Google Scholar

Phelps, N. A., Bunnell, T., Miller, M. and Taylor, J. (2014) ‘Urban inter-referencing within and beyond Indonesia’, Cities, 39, 37–49. Urban inter-referencing within and beyond Indonesia Cities 39 37 49 Google Scholar

Pritchett, L., Woolcock, M. and Andrews, M. (2013) ‘Looking like a state: techniques of persistent failure in state capability for implementation’, Journal of Development Studies, 49, 1–18. Looking like a state: techniques of persistent failure in state capability for implementation Journal of Development Studies 49 1 18 Google Scholar

Provinsi Jawa Tengah (2013) Provincial family welfare 2013, Semarang, Badan Pusat Statistik Provinsi Jawa Tengah. Provincial family welfare 2013 Google Scholar

Rodrik, D. (2008) ‘Second best institutions’, American Economic Review, 98, 100–4. Second best institutions American Economic Review 98 100 4 Google Scholar

Sandee, H. and Weijland, H. (1989) ‘Rural cottage industry in transition: the roof tile industry in Kabupaten Boyolali, Central Java’, Bulletin of Indonesian Economic Studies, 25, 79–98. Rural cottage industry in transition: the roof tile industry in Kabupaten Boyolali, Central Java Bulletin of Indonesian Economic Studies 25 79 98 Google Scholar

Sandee, H., Isdijoso, B. and Sulandjari, S. (2002) SME clusters in Indonesia: an analysis of growth dynamics and employment conditions, Geneva, ILO. SME clusters in Indonesia: an analysis of growth dynamics and employment conditions Google Scholar

Sandee, H., Rietveld, P., Supratikno, H. and Yuwono, P. (1994) ‘Promoting small scale cottage industries in Indonesia: an impact analysis for Central Java’, Bulletin of Indonesian Economic Studies, 30, 115–42. Promoting small scale cottage industries in Indonesia: an impact analysis for Central Java Bulletin of Indonesian Economic Studies 30 115 42 Google Scholar

Schmitz, H. (1982) ‘Growth constraints on small-scale manufacturing in developing countries: a critical review’, World Development, 10, 429–50. Growth constraints on small-scale manufacturing in developing countries: a critical review World Development 10 429 50 Google Scholar

Schmitz, H. (1995) ‘Collective efficiency: growth path for small scale industry’, Journal of Development Studies, 31, 529–66. Collective efficiency: growth path for small scale industry Journal of Development Studies 31 529 66 Google Scholar

Schmitz, H. (1999) ‘Collective efficiency and increasing returns’, Cambridge Journal of Economics, 23, 465–83. Collective efficiency and increasing returns Cambridge Journal of Economics 23 465 83 Google Scholar

Scitovsky, T. (1954) ‘Two concepts of external economies’, The Journal of Political Economy, 62(2), 143–51. Two concepts of external economies The Journal of Political Economy 62 143 51 Google Scholar

Scott, A. J. (1983) ‘Industrial organization and the logic of intra-metropolitan location, 1: theoretical considerations’, Economic Geography, 59, 233–50. Industrial organization and the logic of intra-metropolitan location, 1: theoretical considerations Economic Geography 59 233 50 Google Scholar

Scott, A. J. (1986) Industrial organization and location: division of labor, the firm and spatial process’, Economic Geography, 62, 215–31. Industrial organization and location: division of labor, the firm and spatial process’ Economic Geography 62 215 31 Google Scholar

Scott, A. J. (2002) ‘Regional push: towards a geography of development and growth in low and middle income countries’, Third World Quarterly, 23, 137–61. Regional push: towards a geography of development and growth in low and middle income countries Third World Quarterly 23 137 61 Google Scholar

Sekimoto, T. (2000) ‘Innovation, change and tradition in the batik industry’, in M. Hitchcock and W. Nuryanti (eds), Building o Batik: the globalization of a craft community, Aldershot, Ashgate, 23–31. Innovation, change and tradition in the batik industry Building o Batik: the globalization of a craft community 23 31 Google Scholar

Storper, M. (1995) ‘The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies’, European Urban and Regional Studies, 2, 191–221. The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies European Urban and Regional Studies 2 191 221 Google Scholar

Taylor, M. and Thrift, N. (1982) ‘Industrial linkage and the segmented economy 1: some theoretical proposals’, Environment and Planning A, 14, 1601–13. Industrial linkage and the segmented economy 1: some theoretical proposals Environment and Planning A 14 1601 13 Google Scholar

Turner, S. (2003) Indonesia’s small entrepreneurs: trading on the margins, London, Routledge-Curzon. Indonesia’s small entrepreneurs: trading on the margins Google Scholar

Von Luebke, C. (2009) ‘The political economy of local governance: findings from an Indonesian field study’, Bulletin of Indonesian Economic Studies, 45, 201–30. The political economy of local governance: findings from an Indonesian field study Bulletin of Indonesian Economic Studies 45 201 30 Google Scholar

Von Luebke, C., McCulloch, N. and Pantunru, A. A. (2009) ‘Heterdox reform symbioses: the political economy of investment climate reforms in Solo, Indonesia’, Asian Economic Journal, 23, 269–96. Heterdox reform symbioses: the political economy of investment climate reforms in Solo, Indonesia Asian Economic Journal 23 269 96 Google Scholar

Weijland, H. (1999) ‘Microenterprise clusters in rural Indonesia: industrial seedbed and policy target’, World Development, 27, 1515–30. Microenterprise clusters in rural Indonesia: industrial seedbed and policy target World Development 27 1515 30 Google Scholar

Wollenberg, E., Moeliono, M., Limberg, G., Iwan, R., Rhee, S. and Sudana, M. (2006) ‘Between state and society: local governance of forestry in Malinan, Indonesia’, Forest Policy and Economics, 8, 421–33. Between state and society: local governance of forestry in Malinan, Indonesia Forest Policy and Economics 8 421 33 Google Scholar

Altenburg, T. and Meyer-Stamer, J. (1999) ‘How to promote clusters: policy experiences from Latin America’, World Development, 27, 1693–713. How to promote clusters: policy experiences from Latin America World Development 27 1693 713 Google Scholar

Amin, A. and Thrift, N. (1992) ‘Neo-Marshallian nodes in global networks’, International Journal of Urban and Regional Research, 16, 571–587. Neo-Marshallian nodes in global networks International Journal of Urban and Regional Research 16 571 587 Google Scholar

Bunnell, T., Miller, M., Phelps, N. A. and Taylor, J. (2013) ‘Urban development in a decentralised Indonesia: two success stories?’, Pacific Affairs, 86, 857–76. Urban development in a decentralised Indonesia: two success stories? Pacific Affairs 86 857 76 Google Scholar

Gordon, I. and McCann, P. (2000) ‘Industrial clusters: complexes, agglomeration and/or social networks’, Urban Studies, 37, 513–32. Industrial clusters: complexes, agglomeration and/or social networks Urban Studies 37 513 32 Google Scholar

GTZ (2001) Minutes of technical meeting between GTZ and Bappenas concerning economic and human resources development (EHRD) program, Jakarta, GTZ. Google Scholar

GTZ (2004) FEDEP, dialogue forum introducer of economic democratization process in Central Java, Jakarta, GTZ. Google Scholar

GTZ (2008) Rattan furniture value chain promotion in the Solo region, Central Java Indonesia, Jakarta, GTZ. Google Scholar

Hadiz, V. and Robison, R. (2005) ‘Neo-liberal reforms and illiberal consolidations: the Indonesian paradox’, Journal of Development Studies, 41, 220–41. Neo-liberal reforms and illiberal consolidations: the Indonesian paradox Journal of Development Studies 41 220 41 Google Scholar

Humphrey, J., and Schmitz, H. (2002) ‘How does insertion in global value chains affect upgrading in industrial clusters’, Regional Studies, 36, 1017–27. How does insertion in global value chains affect upgrading in industrial clusters Regional Studies 36 1017 27 Google Scholar

Jacobs, J. (1969) The Economy of Cities, London, Random House. The Economy of Cities Google Scholar

JICA (2004) The study on strengthening capacity of SME clusters in Indonesia, Tokyo, Japan International Cooperation Agency. Google Scholar

Kabupaten Jepara (2014a) Jepara Dalam Angka 2014. Kabupaten Jepara, Badan Pusat Statistik Kabupaten Jepara. Jepara Dalam Angka 2014 Google Scholar

Kabupaten Jepara (2014b) Product Domestik Regional Bruto, 2013. Kabupaten Jepara, Badan Pusat Statistik Kabupaten Jepara. Product Domestik Regional Bruto, 2013 Google Scholar

Kabupaten Sukoharjo (2014) Kabupaten Sukoharjo Dalam Angka 2014. Kabupaten Sukoharjo, Badan Pusat Statistik Kabupaten Sukoharjo. Kabupaten Sukoharjo Dalam Angka 2014 Google Scholar

Kota Pekalongan (2013) Kota Pekalongan Dalan Angka 2013. Pekalongan, Badan Pusat Statistik Kota Pekalongan. Kota Pekalongan Dalan Angka 2013 Google Scholar

Kota Surakarta (2013) Surakarta Dalam Angka 2013. Kota Surakarta, Badan Pusat Satitstik Kota Surakarta. Surakarta Dalam Angka 2013 Google Scholar

Martin, R. and Sunley, P. (2003) ‘Deconstructing clusters: chaotic concept or policy panacea?’, Journal of Economic Geography, 3, 5–35. Deconstructing clusters: chaotic concept or policy panacea? Journal of Economic Geography 3 5 35 Google Scholar

Masser, I. (1986) ‘The transferability of planning experiences between countries’, in I. Masser, and R. Williams (eds), Learning from other countries, Norwich, GeoBooks, 165–75. The transferability of planning experiences between countries Learning from other countries 165 75 Google Scholar

McGee, T. (1991) ‘The emergence of Desakota regions in Asia: expanding a hypothesis’, in N. Ginsborg, B., Koppel, T. and McGee (eds) The extended metropolis: settlement transition in Asia, Honolulu, University of Hawaii Press, 3–25. The emergence of Desakota regions in Asia: expanding a hypothesis The extended metropolis: settlement transition in Asia 3 25 Google Scholar

Moreno-Monroy, A (2012) ‘Informality in space: understanding agglomeration economies during economic development’, Urban Studies, 49, 2019–30. Informality in space: understanding agglomeration economies during economic development Urban Studies 49 2019 30 Google Scholar

Nadvi, K. (1999) ‘Collective efficiency and collective failure: the response of the Sialkot surgical instrument cluster to global quality pressures’, World Development, 27, 1605–26. Collective efficiency and collective failure: the response of the Sialkot surgical instrument cluster to global quality pressures World Development 27 1605 26 Google Scholar

Nadvi, K. (2007) ‘The cutting edge: collective efficiency and international competitiveness in Pakistan’, Oxford Development Studies, 27, 81–107. The cutting edge: collective efficiency and international competitiveness in Pakistan Oxford Development Studies 27 81 107 Google Scholar

Nichter, S. and Goldmark, L. (2009) ‘Small firm growth in developing countries’, World Development, 37, 1453–64. Small firm growth in developing countries World Development 37 1453 64 Google Scholar

North, D. C. (1990) Institutions, institutional change and economic performance, Cambridge, Cambridge University Press. Institutions, institutional change and economic performance Google Scholar

North, D. C. (2010) Understanding the process of economic change, Princeton, NJ, Princeton University Press. Understanding the process of economic change Google Scholar

P5 Universitas Diponegoro (2013) Laporan Kegiatan Monitoring and Evaluasi: Pengembangan Ekonomi Lokal (PEL) Provinsi Jawa Tengah, Semarang, P5 Universitas Diponegoro. Google Scholar

P5 Universitas Diponegoro (2014) Pedoman Umum FEDEP, Semarang, P5 Universitas Diponegoro. Google Scholar

Perlin, F. (1983) ‘Proto-industrialization and pre-colonial South Asia’, Past and Present, 98, 30–95. Proto-industrialization and pre-colonial South Asia Past and Present 98 30 95 Google Scholar

Perry. M. (2005) ‘Business clusters in the south: a critical appraisal from Indonesian evidence’, Singapore Journal of Tropical Geography, 26, 227–43. Business clusters in the south: a critical appraisal from Indonesian evidence Singapore Journal of Tropical Geography 26 227 43 Google Scholar

Phelps, N. A. (1992) ‘External economies, agglomeration and flexible accumulation’, Transactions of the Institute of British Geographers, 17, 35–46. External economies, agglomeration and flexible accumulation Transactions of the Institute of British Geographers 17 35 46 Google Scholar

Phelps, N. A., Bunnell, T., Miller, M. and Taylor, J. (2014) ‘Urban inter-referencing within and beyond Indonesia’, Cities, 39, 37–49. Urban inter-referencing within and beyond Indonesia Cities 39 37 49 Google Scholar

Pritchett, L., Woolcock, M. and Andrews, M. (2013) ‘Looking like a state: techniques of persistent failure in state capability for implementation’, Journal of Development Studies, 49, 1–18. Looking like a state: techniques of persistent failure in state capability for implementation Journal of Development Studies 49 1 18 Google Scholar

Provinsi Jawa Tengah (2013) Provincial family welfare 2013, Semarang, Badan Pusat Statistik Provinsi Jawa Tengah. Provincial family welfare 2013 Google Scholar

Rodrik, D. (2008) ‘Second best institutions’, American Economic Review, 98, 100–4. Second best institutions American Economic Review 98 100 4 Google Scholar

Sandee, H. and Weijland, H. (1989) ‘Rural cottage industry in transition: the roof tile industry in Kabupaten Boyolali, Central Java’, Bulletin of Indonesian Economic Studies, 25, 79–98. Rural cottage industry in transition: the roof tile industry in Kabupaten Boyolali, Central Java Bulletin of Indonesian Economic Studies 25 79 98 Google Scholar

Sandee, H., Isdijoso, B. and Sulandjari, S. (2002) SME clusters in Indonesia: an analysis of growth dynamics and employment conditions, Geneva, ILO. SME clusters in Indonesia: an analysis of growth dynamics and employment conditions Google Scholar

Sandee, H., Rietveld, P., Supratikno, H. and Yuwono, P. (1994) ‘Promoting small scale cottage industries in Indonesia: an impact analysis for Central Java’, Bulletin of Indonesian Economic Studies, 30, 115–42. Promoting small scale cottage industries in Indonesia: an impact analysis for Central Java Bulletin of Indonesian Economic Studies 30 115 42 Google Scholar

Schmitz, H. (1982) ‘Growth constraints on small-scale manufacturing in developing countries: a critical review’, World Development, 10, 429–50. Growth constraints on small-scale manufacturing in developing countries: a critical review World Development 10 429 50 Google Scholar

Schmitz, H. (1995) ‘Collective efficiency: growth path for small scale industry’, Journal of Development Studies, 31, 529–66. Collective efficiency: growth path for small scale industry Journal of Development Studies 31 529 66 Google Scholar

Schmitz, H. (1999) ‘Collective efficiency and increasing returns’, Cambridge Journal of Economics, 23, 465–83. Collective efficiency and increasing returns Cambridge Journal of Economics 23 465 83 Google Scholar

Scitovsky, T. (1954) ‘Two concepts of external economies’, The Journal of Political Economy, 62(2), 143–51. Two concepts of external economies The Journal of Political Economy 62 143 51 Google Scholar

Scott, A. J. (1983) ‘Industrial organization and the logic of intra-metropolitan location, 1: theoretical considerations’, Economic Geography, 59, 233–50. Industrial organization and the logic of intra-metropolitan location, 1: theoretical considerations Economic Geography 59 233 50 Google Scholar

Scott, A. J. (1986) Industrial organization and location: division of labor, the firm and spatial process’, Economic Geography, 62, 215–31. Industrial organization and location: division of labor, the firm and spatial process’ Economic Geography 62 215 31 Google Scholar

Scott, A. J. (2002) ‘Regional push: towards a geography of development and growth in low and middle income countries’, Third World Quarterly, 23, 137–61. Regional push: towards a geography of development and growth in low and middle income countries Third World Quarterly 23 137 61 Google Scholar

Sekimoto, T. (2000) ‘Innovation, change and tradition in the batik industry’, in M. Hitchcock and W. Nuryanti (eds), Building o Batik: the globalization of a craft community, Aldershot, Ashgate, 23–31. Innovation, change and tradition in the batik industry Building o Batik: the globalization of a craft community 23 31 Google Scholar

Storper, M. (1995) ‘The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies’, European Urban and Regional Studies, 2, 191–221. The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies European Urban and Regional Studies 2 191 221 Google Scholar

Taylor, M. and Thrift, N. (1982) ‘Industrial linkage and the segmented economy 1: some theoretical proposals’, Environment and Planning A, 14, 1601–13. Industrial linkage and the segmented economy 1: some theoretical proposals Environment and Planning A 14 1601 13 Google Scholar

Turner, S. (2003) Indonesia’s small entrepreneurs: trading on the margins, London, Routledge-Curzon. Indonesia’s small entrepreneurs: trading on the margins Google Scholar

Von Luebke, C. (2009) ‘The political economy of local governance: findings from an Indonesian field study’, Bulletin of Indonesian Economic Studies, 45, 201–30. The political economy of local governance: findings from an Indonesian field study Bulletin of Indonesian Economic Studies 45 201 30 Google Scholar

Von Luebke, C., McCulloch, N. and Pantunru, A. A. (2009) ‘Heterdox reform symbioses: the political economy of investment climate reforms in Solo, Indonesia’, Asian Economic Journal, 23, 269–96. Heterdox reform symbioses: the political economy of investment climate reforms in Solo, Indonesia Asian Economic Journal 23 269 96 Google Scholar

Weijland, H. (1999) ‘Microenterprise clusters in rural Indonesia: industrial seedbed and policy target’, World Development, 27, 1515–30. Microenterprise clusters in rural Indonesia: industrial seedbed and policy target World Development 27 1515 30 Google Scholar

Wollenberg, E., Moeliono, M., Limberg, G., Iwan, R., Rhee, S. and Sudana, M. (2006) ‘Between state and society: local governance of forestry in Malinan, Indonesia’, Forest Policy and Economics, 8, 421–33. Between state and society: local governance of forestry in Malinan, Indonesia Forest Policy and Economics 8 421 33 Google Scholar

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Author details

Phelps, Nicholas A.

Wijaya, Holi B.

Phelps, Nicholas A.

Wijaya, Holi B.