This report emphasises local economic development in Indonesia’s smaller urban centres like Kabupaten Semarang, Java and offers policy recommendations for growth.
In Indonesia and across the developing world, urban policy and scholarship have predominantly focused on large cities. 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, the reality is much more complex and encapsulated best by Terry McGee’s concept of “desakota”, which refers to the interweaving of rural and urban activities, blurring conventional boundaries between villages and cities. Indonesia’s urbanisation – with the country recently becoming more than half urban – prominently features medium-sized cities, fostering agglomeration economies. As the “desakota” phenomenon spreads – particularly in Java, which attracts manufacturing firms due to lower labour and land costs – rural-to-urban transformations continue to occur throughout parts of Indonesia that have no official designation as cities, or jurisdictional kotas.
As the working age-population expands, and aligns itself with the growth of smaller cities, the country’s much-anticipated “demographic dividend” moves a step closer to becoming reality. As budding centres of entrepreneurship, these cities continue to draw young migrants in search of work. However, many young workers encounter precarious employment.
Indonesia’s success hinges on fostering local economic development and job creation in these smaller urban centres. The report spotlights Kabupaten Semarang in Central Java, outlining its recent growth, local economy, and offering policy recommendations for enhancing its role as a centre for social and economic mobility in the region.