Capital Stock Estimates by Province and Interprovincial Distribution in Indonesia

We use the perpetual inventory method to estimate gross fixed capital stock at the provincial level in Indonesia. We employ a relatively long series of past annual investments at constant prices for 1983–2007 and a province‐specific survival function for capital. For this purpose, we use published data on provincial income accounts, input–output tables, and surveys from existing studies. Capital was found to be over‐concentrated in the Java‐Bali region and inefficiently distributed among provinces. This distribution contributed to national growth in the majority of the sample years.