GROWTH INTERDEPENDENCE IN THE PRESENCE OF SPATIAL OUTLIERS: IMPLEMENTATION OF AN AVERAGE DIFFERENCE ALGORITHM ON EAST JAVA REGIONAL ECONOMIC GROWTH 2011–2016
GROWTH INTERDEPENDENCE IN THE PRESENCE OF SPATIAL OUTLIERS: IMPLEMENTATION OF AN AVERAGE DIFFERENCE ALGORITHM ON EAST JAVA REGIONAL ECONOMIC GROWTH 2011–2016

Summary/Abstract: Recent analysis regarding economic growth has started to accommodate growth interdependence. Spatial econometrics, which relies on the assumption of that the economic growth is spatially autocorrelated, is the main tool of analysis. The spatial autocorrelation is commonly measured by Global Moran’s I, which is not robust to spatial outliers. The visualisation of available data indicates that East Java has experienced economic growth interdependence, but the Global Moran’s I for the GDP growth shows otherwise. The presence of spatial outliers is suspected as the cause of the insignificance spatial interaction. Using an average difference algorithm, this study detects the spatially outlying regencies/municipalities in terms of their yearly economic growth during 2011–2016. Based on the data, this study detects some spatially outlying regions, which mask the significance of the spatial interaction of the GDP growth among the regencies/municipalities.

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