Indefinite: Relocation of the Capital City Does Not Impact National GDP Growth

Research from the Institute for Development of Economics and Finance (Indef), titled *The Impact of the Capital City Relocation on the Indonesian Economy*, shows that the relocation of the capital city did not provide a boost to national real Gross Domestic Product (GDP) growth. The capital city relocation only contributed positively to four regions.

The region with the largest positive impact was East Kalimantan Province, with an additional growth of up to 0.24%. The next regions were North Kalimantan with an additional economic growth of 0.02%, South Kalimantan 0.01%, and West Papua 0.01%. Central Kalimantan and West Kalimantan provinces were unaffected despite their proximity to the new capital. Meanwhile, regions negatively impacted by the capital city relocation were DKI Jakarta and Yogyakarta Special Region, whose growth decreased by 0.03%.

Indef used a computable general equilibrium (CGE) model for its analysis. This model was used to examine the impact of changes in general economic variables on income distribution across various household types, industrial sectors, and several macroeconomic indicators. The processing technique used was the GEMPACK software.