Surabaya — A 2026 study by Etik Ulandari and Prayudi Setiawan Prabowo from the State University of Surabaya (UNESA) reveals that regional inequality in Bali Province remains significant and is strongly influenced by fiscal capacity, labor participation, human development, and population dynamics. Published in the East Asian Journal of Multidisciplinary Research, the study highlights how uneven economic growth continues to shape disparities across Bali’s districts and cities.
The research draws attention because Bali is widely known as one of Indonesia’s most successful tourism-driven economies. However, the benefits of that growth are not evenly distributed. While southern regions such as Denpasar and Badung continue to expand rapidly, other areas like Bangli, Karangasem, and Klungkung lag behind in infrastructure, investment, and public services. The findings provide timely insight into Bali’s development trajectory during the 2018–2024 period, which includes pre-pandemic growth, the COVID-19 disruption, and the recovery phase.
Regional inequality has long been a structural issue in Indonesia, and Bali reflects this pattern at the provincial level. Economic activity remains concentrated in urban and tourism hubs, creating a gap between “core” and “peripheral” regions. Recent data cited in the study shows that Bali’s Williamson Index—a common measure of regional inequality—reached 0.5094 in 2024, indicating a moderate to high level of disparity. This increase from previous years confirms that development remains uneven despite overall economic growth.
To examine the drivers behind this inequality, Etik Ulandari and Prayudi Setiawan Prabowo analyzed panel data from nine regencies and cities in Bali over a seven-year period. The data was sourced from Indonesia’s Central Statistics Agency and the Ministry of Finance. Using a quantitative approach, the researchers applied a Fixed Effect Model to capture variations between regions and over time, allowing for a more precise understanding of how each factor influences inequality.
The study identifies three key factors that contribute to increasing regional inequality in Bali. Local Own-Source Revenue (PAD) shows a strong positive relationship with inequality. Regions with higher revenue, particularly those benefiting from tourism, have greater financial capacity to invest in infrastructure, education, and public services. This advantage accelerates development in already advanced areas, widening the gap with less developed regions.
The Labor Force Participation Rate also contributes positively to inequality. While higher participation typically signals economic activity, the study finds that it does not necessarily translate into equitable development. In several regions, high participation is driven by low-productivity sectors, meaning that increased labor involvement does not significantly improve income or welfare. As a result, disparities persist across regions with different economic structures.
The Human Development Index (HDI) further amplifies inequality. Regions with higher HDI—indicating better access to education, healthcare, and income opportunities—experience faster and more sustainable growth. Meanwhile, regions with lower HDI struggle to keep pace, creating a widening development gap. This finding highlights how improvements in human capital, when unevenly distributed, can unintentionally deepen inequality.
In contrast, population size plays a different role. The study finds that population growth and mobility have a negative relationship with inequality, meaning they help reduce disparities. As people move between regions, they bring labor, skills, and economic activity, contributing to a more balanced distribution of development. This dynamic suggests that population flows can act as a natural equalizer when supported by strong regional connections.
Etik Ulandari explains that Bali’s development pattern is heavily influenced by spatial concentration. She notes that regions with better infrastructure and access to tourism continue to attract investment and labor, reinforcing their growth advantage. Prayudi Setiawan Prabowo adds that fiscal decentralization policies have not fully addressed inequality, particularly when local government revenue capacity varies significantly across regions. Both researchers emphasize that without balanced policy intervention, disparities are likely to persist.
The implications of these findings are significant for policymakers and regional planners. Unequal development affects not only economic outcomes but also social conditions, including access to education, healthcare, and employment opportunities. It can also drive excessive urban migration, placing pressure on infrastructure in already developed areas while leaving other regions underutilized.
The study suggests that a more inclusive development strategy is needed to address these challenges. Strengthening fiscal capacity in less developed regions, expanding economic activities beyond tourism, and improving the quality of education and workforce skills are essential steps toward reducing inequality. Encouraging investment in emerging regions and improving connectivity between districts could also help distribute growth more evenly across Bali.
According to Etik Ulandari of the State University of Surabaya, “regional inequality in Bali reflects the uneven distribution of fiscal resources, human development, and economic opportunities across districts.” Prayudi Setiawan Prabowo further notes that “policy interventions must focus on balancing these structural differences to ensure that growth benefits all regions, not just the economic centers.”
Etik Ulandari and Prayudi Setiawan Prabowo is a researcher in economics at the State University of Surabaya
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