Infrastructure provision and economic growth: evidence from the longest bridge construction in Indonesia

Abstract

The construction of the Suramadu bridge, the longest bridge in Indonesia connecting the islands of Java and Madura, aimed to stimulate regional economic growth in Madura and reduce disparity. However, 13 years after the construction, significant economic progress in Madura has yet to be seen. This study examines the impact of the bridge construction on the economic growth of Bangkalan, a Madura Island district closest to the bridge from 2010 to 2017. This study employed the synthetic control method (SCM) to construct a synthetic control unit that mimics Bangkalan’s economic growth trajectory in the absence of the Suramadu bridge. The SCM allows for comparison of Bangkalan’s economic growth trajectory with its synthetic control unit post the Suramadu bridge operation. The finding indicates that the Suramadu bridge provision lower the economic growth in Bangkalan. The finding underscores the imperative for careful infrastructure planning to yield optimal returns. Moreover, it advocates for a holistic approach wherein hard infrastructure initiatives are complemented by investments in soft infrastructure, particularly in education and healthcare sectors. Such integrated strategies are essential for realizing the full potential of infrastructure projects in driving sustainable economic growth.

Keywords

• Infrastructure provision
• regional infrastructure
• economic growth
• impact evaluation
• synthetic control method
• Economics