This paper examines the dynamics of urban development of the Jakarta metropolitan region, called Jabotabek, from 1980 through the early 1990s. We focus on the rapidly changing spatial allocation of residences and business, finding that Jabotabek is following expected developmental patterns but faces special and some critical problems Population densities remain unusually high and urban development is hindered by very poor land market institutions—weakly defined property rights particularly for traditional low income residents, complete lack of active land use planning, and relatively low infrastructure investments. Industry is rapidly suburbanising to take of advantage of low land prices and wages in suburban Botabek. With toll road construction east and west from the city, within the five-year period 1986-1991, Jabotabek moved from being a monocentric city where core city industrial activity dominated to a predominantly multi-centred city. These developments and implicit government policy have hurt small-scale industry, which ultimately will hinder the whole development process. Issues of spatial mismatch, where low income workers' residences and workplaces become inordinately spatially separated due to government policies in land markets, herald increasing problems of urban underemployment and social unrest.
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