Page 30 - Contributed Paper Session (CPS) - Volume 2

CPS1409 Rahma F.

Physical vs economic distance, the defining
spatial autocorrelation of Per Capita GDP among
38 cities/regencies in East Java
Rahma Fitriani
Department of Statistics, University of Brawijaya Malang, Indonesia

Abstract
The interdependence of economic activity among nearby regions has been an
issue which also takes place among cities/regencies of East Java. This
phenomenon has also known as spatial interaction. Its significance depends
on the chosen distance to define the neighboring regions. When the
phenomenon understudy is economic productivity, it is reasonable to use an
economic based distance, instead of the geographical distance between
two regions. The objective of this study is to show that different distance
concepts of forming a neighboring cities/regencies in East Java leads to
different strength of spatial interaction of the economic productivity (per
capita GDP). Both geographic and economic based distances are used to
define the k nearest neighbors. It also defines neighbors within a specified
radius of geographical distance. The strength of the spatial interaction is
indicated by the significance of the spatial auto orrelation of the GDP among
the neighboring cities/regencies, based on the Moran’s I test. The result shows
that there is no significant spatial autocorrelation of the per capita GDP among
the k nearest neighbors economically and geographically. However, the strong
spatial autocorrelation presents among the cities/regencies within 125 km
radius, an average distance between cities/regencies in East Java. The
cities/regencies within that geographical distance are the cities/regencies
which have the shortest economic distance.

Keywords
Economic cost; spatial autocorrelation; Moran I; nearest neighbours; economic
distance

1. Introduction
The interdependence of economic activity among nearby regions has
invited more attention (Fingleton and López-Bazo 2006; Ertur and Koch 2007;
Tian, Wang et al. 2010). Similar geographic conditions, the advance of
transportation and communication technology, are assumed as the trigger of
the interdependence. Motivated by this issue, recent studies regarding local
economic productivity must include the effect of neighboring economic
activity. East Java is one of the provinces in Indonesia which has experienced
strong economic growth. It reaches the above national level of economic

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