Redressing Equity Issues in Natural Resource-Rich Regions: A Theoretical Framework for Sustaining Development in East Kalimantan, Indonesia

Abstract:     
Despite having potentials for economic growth, natural resource-rich regions in developing countries, like East Kalimantan Province of Indonesia, often face problems emerging from unequal distribution of development benefits and extreme exploitation of natural resources. Economic inequality and poverty on one hand, and threats of unsustainability on the other, are thus common. Essentially, the problems share a common root of cause, namely inequity. The main question is therefore: “Given that the immediately viable prospects of achieving economic development in developing countries lies in natural resource-rich regions, how can public policy in such regions assist in promoting intra- and inter-generational equity, and thus sustainability?” This paper proposes a theoretical framework for public policy reformulation that can help resolve ing the problems in East Kalimantan. Regional development in East Kalimantan should consequently apply equity in four main functions: benefit distribution to the people; in the production function of natural resources; in the nonproduction function and in reinvestment for sustainability. Equity failures in benefit distribution end up in problems of poverty and economic inequality. Inequity in the production function causes problems of inequality and benefit leakages to foreign countries, along with the threat of unsustainability due to excessive exploitation. Moreover, equity failures in the nonproduction function deteriorate the assimilative and carrying capacity of the environment. Finally, equity failures in sustainability reinvestment threaten sustainability, mainly because of insufficient funding to reverse the environmental damage. To resolve inequity problems, and thus to ensure sustainability, it is necessary to reform and renew related public policies, so correct and corruption-free implementation will bring sustainable welfare to the people. Finally this paper suggests 18 policy areas needed to be reformulated.

Number of Pages in PDF File: 35

Keywords: Equity, equity failure, inequality, natural resource-rich, sustainable regional development, developing countries

JEL Classification: A12, D63, H23, I31, O18, O21, R58

Accepted Paper Series