Using historical institutionalism theory, the qualitative analysis proposes the argument that the regional economic variation in Indonesia is related to past institutional capacity. Following historical institutionalism, the analysis was concerned with the components of the framework, including critical antecedents, critical junctures, and reproduction of institutions, as adapted from political science (Hall and Taylor 1996; Skocpol 1979; Thelen 1999; Pierson 1996).

RESEARCH PROCEDURE

The analysis of historical institutionalism and economic growth was illustrated with a context-based strategy and decision-making, as well as with networks and conflicts between actors. This illustration was directed towards the specific place of the Batam and Bandung municipalities in post-trade liberalization and decentralization. Furthermore, the case study was contextualized by connecting the analysis at this level of institutional evolution and policy innovation with key issues that occurred at higher governance levels and external processes that determined economic growth. This includes the supranational, national, and regional levels that were influenced through formal, informal, and cultural rules.

In institutional analysis, narratives are essential to contextualizing and constructing empirical situations (Healey, 2007). In this sense, narratives are sequences of connected events and the relationships between events and their consequences. After constructing such narratives, interpretation and conclusion are generated with coding techniques. This approach, as with other qualitative methods, is expected provide insights that combine the effects of several factors and ‘multiple conjectural causation’ (Silverman, 2005).

To gather such narratives, semi-structured interviews were conducted with experts including government officers at all levels, NGO officials, and international consultants such as the APCO Worldwide and ASIA Foundation. All categories of interviewees represent agents at different stages of the institutional process. Thus, each category of interviewees shows the roles, influence, path dependence, and path breaker that contributed to the regional economic growth differences. The interviews normally lasted for approximately 60 minutes.

The interviews aimed to acquire historical data and reveal the individual subjective experiences of the respondents who were involved in institutional building. Emphasis was placed on institutional building, network, and discourses that prompted the actors to innovate economic policies. Furthermore, the interviews explored how the respondents constructed policies, networks, and innovation that determined innovation in policies. The information from the interviews was analysed using the standard coding technique and compared with other sources such as field observations, official documents, and newspapers.