The center-periphery problem

The center-periphery problem

By S. Belen

JAKARTA (JP): Immanuel Wallerstein's theory about the main
characteristics of gap-related problems between the center and
the periphery also applies to the relationship among islands in
Indonesia.

The main characteristics of gap-related problems, as discussed
by A. Wisnuhardana in his "Social gaps: A ticking time bomb"
article in this newspaper on Oct. 25, include the flows of
capital and technology from the periphery to the center and the
large-scale exploitation of natural and human resources mostly in
the periphery. These problems often cause the widening gaps
between the center and the periphery as well as between a small
group of economic elite and the larger part of the population.

Wisnuhardana's article focused on the relationship between
central and peripheral capitalist states, with advanced western
countries acting as the center and developing regions as the
periphery.

Within the Indonesian context, Java, during the Dutch colonial
period, played a role as the center and the other islands as the
periphery. Trade and business concentrated in Java, while the
other islands supported it. On a larger scale, Indonesia,
together with other colonized territories, supported and served
the Netherlands, which acted as the center.

Although many colonized countries have already achieved
independence, the pattern of imbalanced relationships between
developed countries as the center and developing countries as the
periphery still occurs. The pattern is replicated at the national
level in many developing countries. In China, for example, the
center is the eastern coast areas where industrialization is
concentrated, while the periphery is the remaining parts of that
country. In Malaysia, the center is the western coast of its
peninsula, whereas the periphery is the other part of the
peninsula and East Malaysia (Sarawak and Sabah).

In Indonesia, even after its independence, conditions during
the colonial period have strengthened during its modern history.

How has this happened? On the national economic scale, there
is a triangle relationship -- among multinational corporations
(like the Dutch East Indies Company during the colonial period),
the ruling elite of the government and the business elite of the
private sector -- which collaborates for their mutual benefit.
Here, collusion, corruption and monopolistic practices usually
occur.

Industrialization, business and trade have been concentrated
in Java as the center. Although mining and other industries also
operate in Sumatra, Kalimantan, Sulawesi and Irian Jaya, they are
not well dispersed, leaving Java as the main key linking many
types of industries throughout the country.

In the rest of the country, mining and primary industries
operate to produce raw materials and other products to be
supplied for further processing or consumption in Java.

Statistical data show that the western part of Indonesia
dominates about 83 percent of the country's gross domestic
product (GDP), while the eastern part holds only 17 percent. Of
the 83 percent, the major concentrated portions are in Java.

The central role of Java during the colonial period was
further strengthened by multinational companies, supported by big
domestic counterparts, mainly belonging to conglomerates. Since
the beginning of national development in 1969, the ruling elite
of the government has facilitated a number of companies through
financial support, special privileges and monopolistic rights.
These companies then grew bigger and bigger. Multinational
companies and their partners prefer to invest in Java because its
infrastructure -- such as roads, railway systems, shipping,
aviation, telecommunication, electricity and gas network -- is
better than on other islands. The quantity and quality of human
resources in Java are higher than those outside of Java.

The main characteristics of gap-related problems between the
center and the periphery at the international level -- as pointed
out by Wallerstein -- also apply to the center-periphery
relationship at the national level in Indonesia. Capital, for
instance, always flows from the periphery to the center. People
outside of Java are highly dependent on industrial products from
that island. They have to buy the products at more expensive
prices because of higher transportation costs. Money circulated
outside of Java flows back to the island because many small-scale
companies there, particularly those operating in the service
sector such as banks, insurance companies, bookshops, newspapers
and hotels, are in fact branches of big companies in Java.

The use of technology creates bigger gaps. In general, Java is
better and quicker than the other islands in using advanced
technology transferred from developed countries. Furthermore, the
use of such technology in the industrial sector threatens the
existence of local traditional industries. Many skills used in
locally-developed technology tend to disappear sooner in Java, as
compared to the other islands, due to the concentration of modern
industries there. In the other islands, the rapid use of
industrial products derived from Java threatens the existence of
local home industries, such as the local production of food and
drinks, traditional weaving, medicinal herbs, traditional
woodwork and house building. The decrease of the local home
industries means the extinction of certain traditional skills,
which supported people's lives for centuries.

The peripheral areas tend to be more dependent on the central
area. As a consequence, the more modern products are consumed,
the less the production capacities outside Java are.

The exploitation of natural resources, such as minerals,
forests, fish and plantation resources outside of Java tends to
degrade the environment there, leading to the limitation of the
use of natural resources by people for their subsistence. That
limitation and the rapid decrease in production capacities
accelerate the impoverishment process outside of Java.

In terms of human resources, the bigger the discrepancies
between Java and the other islands tend to be, the more Java
becomes urbanized as people flow to Java from the periphery.
Additionally, the concentration of better universities and
greater working opportunities in Java increase the "braindrain"
from other islands to Java. The lack of quantity and quality of
human resources outside of Java decreases the capacity to
accelerate regional development there.

Ultimately, this gap between Java and the other islands, and
between the western and eastern parts of the country, will
generally threaten national unity. The gaps are another ticking
time bomb. Therefore, the accentuation of development outside of
Java (especially in eastern provinces), poverty eradication
programs and the specialization of industries according to
regional characteristics are examples of policies to be
implemented more consistently in the future.

Separatist regional movements in the past will not be repeated
if serious efforts are made to eliminate this time bomb. The
imbalanced relationship between Indonesia as one of the
peripheral countries with other developed countries as the center
should not sacrifice its national unity.