This report highlights the evolving urbanisation trends in Indonesia, the demographic challenges the country faces, and the importance of addressing employment and economic development in small and medium-sized cities like Kupang.
This report examines Indonesia’s urbanisation and economic development, and highlights the significance of smaller and medium-sized cities in this context. Traditionally, urban policy and scholarly attention have centred on large cities, particularly Jakarta. Indonesia’s urbanisation process is popularly imagined as a deluge of rural migrants flooding into Jakarta in search of livelihood opportunities, resulting in “closed city” policies and calls for relocating the national capital. However, this narrative oversimplifies Indonesia’s complex urbanisation process.
Perhaps the best way to capture the essence of structural transformation, urbanisation and economic development in Indonesia is Terry McGee’s concept of Java as a collection of “desakota” regions. The idea connotes an intricate intermingling of rural and urban economic activities, blurring conventional boundaries between villages and cities. As the “desakota” phenomenon keeps expanding, causing a shift in the distribution of Indonesia’s urban population, the country faces the challenge of creating productive employment opportunities for its growing workforce. The anticipated “demographic dividend” is no longer a distant prospect, as the working-age population has expanded rapidly. This demographic opportunity aligns with the growth of small and medium-sized cities and “rurban” areas, highlighting the critical role of urban areas beyond major cities in addressing development challenges like poverty reduction, migration management, youth employment, and harnessing urbanisation’s potential.
The success of Indonesia’s urbanisation and demographic transition depends largely on promoting local economic development and job creation in these smaller urban centres, fostering an environment conducive to the growth of small and medium-sized businesses. By employing the case study of Kupang, a city in eastern Indonesia, this report offers insights and policy recommendations that will enhance its role as a hub for social and economic mobility in the region.