Final Test M. Gama Iffahindra (06407017)

SME SPATIAL DISTRIBUTION IN ECONOMIC CRISIS

ABSTRACT
Small and medium enterprises (SMEs) is an important part of the economy of a country or region, not excluded in Indonesia. As an illustration, in spite of contributions in national output (GDP) and only 56.7 percent in export nonmigas only 15 percent, but SMEs contribute around 99 percent in the number of business entities in Indonesia and have a 99.6 percent share in employment (Kompas , 14/12/2001). However, in reality, this is less the attention of SMEs. Can be said that awareness of the importance of SMEs can be said then appear later this course.

INTRODUCTION
At least there are three reasons that underlie the developing world has significant presence of SMEs look (Berry, et al, 2001). The first reason is because the performance of SMEs tend to be better in terms of the productive workforce. Second, as part of dinamikanya, SMEs often achieve increased productivity through investment and technological change. The third is often believed that the SMEs have the benefits of flexibility in terms of big business instead. Kuncoro (2000a) also mentioned that small business and households in Indonesia have played an important role in absorbing labor, increase the number of business units and support household income.
The third reason that Berry et al cited above are very relevant in the context of a middle of an economic crisis. Interesting aspect of flexibility is also linked with the results of the study Akatiga based survey in West Java, Central Java, Yogyakarta, North Sulawesi and North Sumatra. Akatiga findings are cited as Berry et al (2001) is that small businesses in more suffering due to the crisis rather than outside Java, as well as in the urban areas when compared with that in rural areas.
Meanwhile, based on GDP data, the economic crisis has caused the provinces in the economic contraction rather than the larger areas in Indonesia (see picture below). Five provinces in Java is all five of the provinces in Indonesia experienced kemorosotan economic terparah. In 1998, when Indonesia experienced economic contraction terparah, only Papua are still positive economic growth while other provinces experienced contraction. On the year, all provinces in Java experience economic contraction far more severe than other provinces (see also Alisjahbana and Akita, 2002).


Thus, in addition to the economic contraction terparah, small businesses in the provinces on the island of Java also suffer more due to the economic crisis. Meanwhile, according to analysis results Watterberg, et al (1999), social impact of the economic crisis is very concentrated in urban areas and in Java, and a number of provinces in Eastern Indonesia. In other words, there are indications of the spatial dimensions of economic crises that occurred since mid-1997.
In the context of SMEs, one of the interesting questions that appear to whether the economic crisis is truly bringing the influence of the spatial dynamics of the SME? This is only one of the only aspects of spatial dynamics of SMEs, namely the distribution spasialnya. Can be expressed during this that a number of studies have been done for the spatial distribution of manufacturing industry, especially the large-scale and medium, for example, Azis (1994), Hill (1996), Kuncoro (2000a), Sjöberg and Sjöholm (2002). However, similar to the observation of SMEs still do not seem to be many (Kuncoro, 2000b).

1. Survive the SME
The economic crisis, especially the very severe, it has been difficult in the day-to-day lives. In this case it is not surprising that unemployment, loss of revenue and meet the basic difficulty is the social issues that are felt by society as a result of the economic crisis. Results of the survey, conducted in cooperation with the World Bank and the Ford Foundation's Central Statistics Agency (September-October 1998) asserts that the three issues that are placed by the community as a priority issue, or should soon get a settlement (Watterberg et al, 1999). In other words, the third thing is very complicated issues faced by society in general.
Condition of employment during the crisis seems to give a picture of the social impact of economic crisis (Table 1). The unemployment rate increased from 4.9 percent in 1996 to 6.1 percent in 2000. The economic crisis also has to reverse the trend appear to formalization of the economy as the reduction in formal sector workers to be 35.1. In other words, the role of the informal sector have become important in a period of economic crisis. The informal sector itself is a sector where most of Indonesia is labor.
Meanwhile, recently revealed that many SMEs have an important role for the public in the midst of economic crisis. Believed to foster the SME will also be able to achieve economic recovery (Kompas. 14/12/2001). Similar case also applies to the informal sector. Own small business, in most informal and therefore relatively easy to be penetrated by actors of new business. Opinions on the role of SMEs or the informal sector are true at least when associated with a role in minimizing the social impact of economic crisis, especially the issue of unemployment and loss of public revenue.
SMEs can be said is one of the solutions for people to stand still in the face with a crisis that is involved in the activities of small businesses that are mainly informal. With this the problem of unemployment can be a little more tertolong and are also implications in terms of income. How anjloknya with income community that, of course, reduce the purchasing power of the community products previously supplied by many large-scale business? Not
may be products of SMEs is a substitution for products business of the bankruptcy or at least difficult times due to the economic crisis. If the case is at once the trend is also a response to the purchasing power decline.
Image in the top-organized based on the results of the Integrated Business Surveys conducted BPS-presumably can be useful to give a picture how the role of SMEs for the community in crisis. [1] Surveys are limited to SMEs which are not incorporated, so the results could also reflect the informal sector. All economic sectors covered by the survey, except the agricultural sector. Therefore, do not include the agricultural sector, the survey results will better reflect the SMEs in urban areas because the agricultural sector are mostly in rural areas. This is important because Watterberg et al (1999) also concluded that the social impact of the economic crisis more concentrated in the region perkota.Secara general, the results on the BPS survey shows some interesting trends. From image 1 it appears that the number of SME business units tend to be reduced. Number of business units in the year 2000 is still less than before the economic crisis. The same thing also happened on the amount of labor. However, the decline in the number of labor setajam not decrease in the number of business units. Therefore, the labor absorbed by each business unit on average is increased. This is an indication that SMEs in fact also have advantages in absorbing the labor force in the economic crisis. The economic crisis has apparently enhance the ability of each of SMEs to absorb manpower. In other words, the sector has participated in a role in overcoming the problem of unemployment caused by economic crisis.
Data-data clearly show that SMEs have the ability to be critical for the economic pillar of the community in facing the economic crisis terpaan. This is not separated from the ability of SMEs to respond to the economic crisis in a rapid and flexible than the ability of the business (Berry et al, 2001). However, there are opinions that the informal sector did not provide meaningful improvement in standard of living of the workers. Living in the informal sector is only a subsistence living (Basri, 2002).

2. DISTRIBUTION spatial SME
Initial questions that need to Diperjelas here is what SME indicator is used. SME is essentially the economic activities of the economic activities of their own while in general can be indicated by employment and value added (Sjöberg and Sjöholm, 2002). In this paper, the indicator will be used is labor, along with the number of SMEs as a business unit also pelengkap.Seperti manufacturing large and medium, spatial distribution of SMEs in the period 1996-2000 are also concentrated in Java. In 1996, about 66 percent of SMEs in Indonesia are Java (Table 2). Occurred since the economic crisis, thus increasing memusat SMEs in Java, ie, to about 68 percent of all business units that SMEs in Indonesia. From five provinces in Java, DKI Jakarta is the least likely to decrease, while the Central Java experience in continuous improvement. In addition to the provinces, and only North Sumatra and South Sulawesi are andilnya in the number of SMEs is high enough.
Apart from the number of business units, spatial distribution of these also need to be seen from the side of labor. Table 2 also shows that the economic crisis beginning down the island
Java, but the start of 1998 the increase back to Java to be 66 percent in 2000. While Indonesia is otherwise, ie, increased in 1998 but then continued to decline to less than 16 percent in 2000. To get a stronger conclusion, the development of regional distribution of SMEs can be seen from the concentration spasialnya. Spatial concentration here refers to the terkonsentrasinya SMEs in some regions only. For example, in studies that measure the spatial concentration of industry trends in Australia 1976-1995, Kuncoro using Theil Index Entropi (Kuncoro, 2000a). While for the case of Indonesian manufacturing industry in 1980 and 1996, Sjöberg and Sjöholm (2002) use the Herfindahl index and the Ellison-Glaeser index.
Kuncoro found that prior to 1988, a spatial concentration of industry has a pattern of decline, but since entering the period of deregulation, the spatial concentration is increased. Note also that the increase in spatial concentration is much more light than in Java and Sumatra islands in Indonesia. Still according to Kuncoro (2002b), in the case of Indonesia, the deregulation of trade, together with a series of deregulation is implemented to strengthen the spatial concentration of manufacturing industry.
While for the case of Indonesian manufacturing industry in 1980 and 1996, Sjöberg and Sjöholm (2002) use the Herfindahl index and the Ellison-Glaeser index of labor force data and the resulting value added manufacturing. Conclusion that not much different from the findings Kuncoro. From the analysis, Sjöberg and Sjöholm memukan that the level of spatial concentration of manufacturing in the period 1980-1996 is not reduced. Also added that the trade liberalization that began in 1983 has failed to decrease the level of concentration of manufacturing industry.
Despite the size of spatial concentration that is used is different, the two studies mentioned above have a relatively similar conclusions. In this paper the size of spatial concentration that is used is the Herfindahl index is applied to both data and business unit labor SMEs. Herfindahl index calculation results are presented in Figure 3.
Before the crisis, the level of spatial concentration of SME business unit is 0.126. In comparison, manufacturing industry Herfindahl index to Indonesia in 1996 is 0.190 (Sjöberg and Sjöholm, 2002). This does not change much in one year after the economic crisis occurred. But in 1999 concentration spatial SME business unit has increased and has not been high enough to decrease the mean in 2000. However, if the views of labor, after the crisis thus decrease the level of concentration spatial despite relatively small. 1999 and 2000, employees of SMEs Herfindahl index increased to more than 0.12. This is an indication of that happening since the economic crisis, there is a tendency for spatial menguatnya concentration of SMEs in Indonesia. Nevertheless, the increased spatial concentration relatit are actually not too big.

CONCLUSION
Since the economic crisis occurred in 1997, SMEs play a role in overcoming problems of employment. Existing data indicate that the role is quite important. However, how the employment by SMEs from the spatial aspect appears still less observed. In this paper the problem then observed spatial distribution of SMEs and not to the spatial dynamics of determinan SME itself.
From the analysis it can be concluded that until the year 2000, SMEs (non-agricultural non-legal) are still concentrated in Java, both views of the number of business and number of employees. There are also indications menguatnya spatial concentration of SMEs in the economy since the crisis Indonesia. Indications are it would still need to equipped with the effort to identify factors that influence what spatial dynamics of SMEs, as is done in studies of idustri manufacturing in general.



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