SPATIAL DYNAMIC OF SMALL AND MEDIUM ENTERPRISES IN THE RECENT ECONOMIC CRISIS

This article discusses the spatial dynamic of small and medium enterprises (SMEs) in Indonesia during the crisis (1998-2000), focusing on the SMEs without legal entity, except agriculture activities. The spatial distribution of SMEs seems increasing which measured by Herfindahl index applied on employment and number of establishment. The study also applies an econometric approach to investigate the determinants of SMEs’ employment. The findings of empirical analysis are that the regional output (GDRP) and population have positive impact on the employment while regional minimum wage (UMR) have an opposite impact. This study confirms previous studies that SMEs in Java more severe than in other provinces.