Infrastructure and Industrial Development: The Case of Central Java

Industrial development does not take place in all regions at the same speed. This paper seeks explanations for regional differences in the development of manufacturing industry in Central Java. Special attention is paid to the impact of infrastructure (roads, telecommunications, electricity) on industrial development. The spatial distribution of manufacturing industry is analysed by means of both secondary data at the kabupaten level and primary data on 274 firms in various parts of Central Java. In addition to demand side factors, infrastructure does indeed play an important role, but local government bureaucratic procedures for obtaining land and permits are also important.