Development Phases for Peripheral Region

While serving as president of the United States, Ronald Reagan once issued a statement that irked left-wing politicians.

He said that the nine most terrifying words in the English language were “I am from the government, and I am here to help” (Mariana Mazzucato, 2021). That period was indeed marked by the overwhelming market-economic thinking that "mocked” the state as a source of disaster.

Then-United Kingdom prime minister Margaret Thatcher was of the same opinion with Reagan, and both were dubbed as the locomotive of liberalism. Such an idea, as history showed, shot high into the sky and became “a cloud that enveloped the world”. This view at the same time was a legitimization for what the Marxian camp criticized as developed capitalist countries perpetuating asymmetrical relations with underdeveloped countries at a global level. It was the center-periphery relationship system seen as economic exploitation of the latter.

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The world later witnessed miraculous changes, riding the rise of the “periphery” countries over the “central” countries.

Periphery and concept of "space"

Capitalism-based countries were not born out of the view that the state did not need to play actively in the economic field. Instead, the state had to be super-active in ramping up the industry, infrastructure development, trade protection and investment promotion. If necessary, the state had to be aggressive to take political control over the sovereignty of other countries (colonialism), followed by pursued hegemony via economic instruments (imperialism). Those working polices laid the foundation for the belief as well as the source to achieve development progress.

With the rise of the nation-state at the beginning of the 20th century, policies began to change through the opening of economic gates and doors between countries as the capitalist countries had reached their full maturity.

The 18th-20th centuries were marked by the implementation of such policies, which resulted in a world economy (for the most part) not characterized by freedom and equitability. With the rise of the nation-state at the beginning of the 20th century, policies began to change through the opening of economic gates and doors between countries as the capitalist countries had reached their full maturity.

However, history unveiled the true facts: the idea of economic openness (liberalism) was not an academic belief, but rather an antagonistic persistence imposed in accordance with the relevant circumstances.

When the economic performance of a “peripheral” state was still porous, a capitalist state opted for protective and aggressive policies. On the other hand, when the economic condition and actors began to drift up, the capitalist state released its grip. The implication was that a “peripheral” newly independent state struggled to follow the rhythm of development policies pushed by the “central” state.

At a time when developing countries were still performing shakily, they were forced to compete with “central” countries that were already strong. This situation led to their economic front yards easily being swept away by powerful economic actors from developed countries.

This savage practice had gone on for hundreds of years. There is never a perpetual scenario, as it turned out Japan, South Korea, China and several other countries managed to capitalize on the scenario’s loopholes to gather their resources for economic expansion. The acceleration of their economic development gained momentum against the “central” states. China will soon overtake the US as the largest economy after edging out Germany as the largest exporter since 2010.

The successes of these countries in seizing economic opportunities were attributed to four policy agendas, namely economic-system design, science-and-technology capacity, economic-sector priority and strategic-policy consistency. South Korea, for example, has focused on accelerating industrialization, penetrating the upstream economy, managing and mobilizing labor and institutionalizing the businesses.

Periphery and sustainable system

Indonesia has seriously envisioned accelerated development of the periphery since Joko “Jokowi” Widodo was elected president. The vision has been brought to refreshed awareness about the disparity in development between rural and urban areas as well as between the country’s western and eastern regions ("central" and "periphery" at the domestic level).

As Bourguignon (2015) notes, central-peripheral relations at the domestic level have also occurred in many other developing countries. So, it is clear that the “periphery” is defined as regional locus (space). This is linear with the “periphery” concept of left economists: Paul Baran, Samir Amin, Fernando H. Cardoso, Raul Prebisch and others. This postulate stems from the belief that advancing and strengthening the “peripheral” zone is a necessity. In the context of Indonesia, the vision of strengthening rural areas and eastern Indonesia, including outermost areas, is an uncompromised necessity.

Of course, it needs time before the efforts bear truly lasting impacts. The proportion of investment between Java and outside Java that used to be in gaping disparity is now balanced.

Massive infrastructure development in rural areas (especially via the village-fund program) and eastern Indonesia is part of the implementation of periphery management. This is a fact that cannot be hidden from this great change. Rural and eastern regional development has now been increasing. Of course, it needs time before the efforts bear truly lasting impacts. The proportion of investment between Java and outside Java that used to be in gaping disparity is now balanced.

However, given the experiences of peripheral countries shifting toward the center, such as South Korea and China, it shows that the strengthening of the periphery cannot be approached only from the "locus" perspective. Affirmation to peripheral development should be understood as gathering knowledge and selecting a policy system that can prevent centrism.

A simple illustration is if infrastructure development is carried out in rural areas, but the stock of knowledge is not developed and the economic instruments are not designed for the participation of local people, then infrastructure is improved only to provide access for the extraction of local resources into the center and the backflow of processed materials to the villages. The “periphery” is hit twice.

In a nutshell, location-based development (rural and disadvantaged areas) is imperative, but obviously it does not end there. If the first phase of peripheral development relies on a space approach, there should be second phase that focuses on strengthening the knowledge and management system or design. The government must strive to raise the knowledge and skills of the community from all levels so that there is no regional and social bias.

Civilization reversal

The third phase of developing the periphery is "reversing the center of civilization". The term of “periphery”, without us realizing it, denotes oppression of civilization. Civilization here encompasses economic, social, political, educational and other dimensions. The issue is not simply a marginalized civilization in the “periphery” area, but rather the incapacitation of the whole value system which is believed to come up to the surface and serve as a reference source.

At this point, the "central" civilization infiltrates to become a source of authority for the administration of the state, and even more broadly people’s life. So, “reversing the civilization” carries the meaning of jacking up the value system at the periphery over the value of centralized authority. This means that authorization over scientific, economic, political, social, legal and other fields are largely shifted toward the "periphery" so that the "central" civilization is no longer a hegemonic force.

This shift in authority requires the building capacity to mobilize all living resources, both locus and system/policy, in the interest of the periphery. The development program must be concentrated on the peripheral region so that the economic, educational, health and administrative infrastructure is not inferior to the central region. This process of overcoming inequality can only be enabled by government initiatives (Henderson, 2020).

The shift in development weight becomes more evident if it is followed with cognitive affirmation in the form of absorption of a new value system with deep roots in the peripheral region. The new system and policy are formulated based on local knowledge, which in some cases has proven to be alternative to development ideas given that the old practices have caused various residues. This shift makes the substance of state governance undergo a profound change because old values are dismantled and replaced with new values.

“Capital city” at least symbolizes the center of political activity, the vortex of economic activity and the power of knowledge production.

Even so, the shift in the locus of development and the imposed redesign of the value system are not sufficient yet. They require symbolization that animates noble attitudes and thoughts. The term “periphery” implies second-class mentality, low self-esteem and less enforcing actions. In the founding of a state, like Indonesia and other countries, it shows how “capital city” has become an effective symbol of state’s authority and nation’s life. “Capital city” at least symbolizes the center of political activity, the vortex of economic activity and the power of knowledge production.

So, the planned relocation of the state capital city that is currently in progress must be interpreted as a framework of reversing civilization, because it will bring about a shifted explosive force of values that can bolster the nation. The discourse on the capital city relocation should not be understood simply from technical matters, i.e. to unravel congestion or tackle economic inequality, but from strategic matters, in terms that it is the process of reversing the nation's civilization in the context of center-periphery relations.

State and “co-shaping market”

The three phases mentioned above should be sufficient to show that peripheral development must be able to eliminate the dichotomy in the center-periphery relations. These three phases are conceptual raw materials that will allow the "periphery" to interact with the "center" in a new dimension of dignified development.

Finally, the fourth phase is the repositioning of the role of the state in this new frame of center-periphery relations. There are three main tasks in the newly structured role of the state. First, the creation of new value from the collective-work approach among the government, business circle and civil society. If the old approach is mostly formulated by the government, the new approach requires a consensus built together for the sake of collective property rights and public interest. Such an approach will ensure that local knowledge is part of the foundation of the state governance and national development.

Second, the relations should not see the state intervene too far in the market. Mazzucato (2021) says that the role of the state is not for fixing the market, but for co-creating and co-shaping the market. The state’s role in the market should no longer be dichotomous, but more collaborative with clearly-defined functions between both. These defined functions must become part of the new values.

Third, in relation to development, the government must have an economic mission. This term refers to the needed change in bureaucracy from an order-oriented to a service delivery-oriented mindset over the expected achievements for scientific and technological advancement, economic prosperity and social justice. This new work orientation requires reshaped spirit because the bureaucracy, as part of state governance, is prone to harbor vested interests, which are usually clashing with the spirit for change.

If this new paradigm of the state role is properly realized, the three phases of restored development, which are based on the center-periphery relations, will become the new buffer for the nation to thrive.

In essence, this new paradigm in the state’s role is aimed at Reagan's ridiculed statement that the state does not act as an agent which is present to solve problems and make citizens happy, but in fact it makes things even more messy. If this new paradigm of the state role is properly realized, the three phases of restored development, which are based on the center-periphery relations, will become the new buffer for the nation to thrive.

Public services being available in the peripheral region (not inferior to the central region), enlightened local people in science because the doors and windows of knowledge and learning are opened wide (including the imposed design of new development system/policy) and the reversal of civilization through a shift in authoritative symbol (such as the relocation of the capital city) become a triple-layered foundation and trident of "peripheral" reinforcement. What is left is that the whole big agenda requires sensible state administrators, not ignorant cliques.

KOMPAS/HERU SRI KUMORO

Ahmad Erani Yustika

Ahmad Erani Yustika, Professor at Economics and Business School, Brawijaya University; Institute for Development of Economics and Finance (INDEF) Senior Economist; and Head of Vice President Secretariat

(This article was translated by Musthofid)