DYNAMICS OF INTERREGIONAL ECONOMIC INEQUALITY IN INDONESIA 2024-2025

Abstract

The phenomenon of regional economic inequality in Indonesia remains one of the most pressing structural challenges in the national development discourse. This study aims to comprehensively analyse the dynamics of regional inequality across 38 provinces in Indonesia during the transition period of 2024 and 2025 using a multidimensional evaluation approach. The quantitative method was applied using five main indicators: Theil Index, Hoover Index, Gini Ratio, Coefficient of Variation (CV), and Williamson Index. Using Gross Regional Domestic Product (GDP) proxy data and demographic distributions, the empirical framework was tested using the Shapiro-Wilk normality test, the Spearman correlation test, and the Wilcoxon Signed-Rank non-parametric difference test. The analysis shows a statistically significant increase in inequality across the five gauges indices from 2024 to 2025. Descriptively, Central Papua Province recorded the highest absolute inequality record, while North Kalimantan showed the highest inequality. The conclusion of this research confirms that the trickle-down effect paradigm has not been optimal, underscoring the strength of the Core-Periphery trap and the anomalous structural change penalty in exploitative, capital-intensive areas. Policy implementation urges a reorientation of fiscal decentralisation governance, spatial redistribution of infrastructure, and economic diversification in Indonesia's eastern region to ensure an inclusive growth trajectory