Market-Driven Resource Allocation And Regional Competitiveness In Indonesia's New Capital Region: Evidence From East Kalimantan

ABSTRACT: Indonesia's relocation of its capital to Nusantara in East Kalimantan represents a transformative development initiative with profound implications for regional competitiveness and resource allocation mechanisms. This study examines market-driven resource allocation patterns and their impact on regional competitiveness in East Kalimantan during the capital relocation period (2023-2025). Employing qualitative methodology through semi-structured interviews with 45 stakeholders, document analysis of 127 policy documents, and field observations across five districts, this research investigates how market forces interact with government interventions in shaping resource distribution. Findings reveal a hybrid allocation model where market mechanisms increasingly dominate land transactions (average price appreciation of 342% in Penajam Paser Utara), labor mobility (78,000 net migration in 2024), and capital flows (USD 4.2 billion private investment commitments). However, significant governance challenges emerge, including regulatory inconsistencies, infrastructure bottlenecks, and inequitable access to economic opportunities. The study demonstrates that while market-driven allocation enhances efficiency in certain sectors, it simultaneously generates spatial disparities, with the Gini coefficient increasing from 0.38 (2023) to 0.43 (2025). Regional competitiveness indicators show mixed outcomes: improved connectivity and investment climate contrast with environmental degradation and social tensions. This research contributes to development economics literature by providing empirical evidence on resource governance in mega-project contexts and offers policy recommendations for balanced development strategies integrating market efficiency with social equity objectives.