ABSTRACT
The regional economic base has largely remained dependent on agriculture and is essentially domestic in nature. As population densities are among the highest in rural Java, this situation has led to strong regional employment shortages and flows of out-migration. But at the same time, by virtue of its history, Yogyakarta Special Region occupies an unparalleled position in Java, in political, cultural, and historical terms. Hence, challenges for Yogyakarta Special Region are to solve employment problems associated with a wide dependency upon agriculture and the need to accommodate structural shifts in employment from agriculture towards an increasingly service-oriented regional economy. Such challenges must also be perceived in the context of increased national and international communications that, in turn, may contribute to bringing about changes in private investments at the national level which may ultimately benefit the region's economic base and capacity for employment and income generation in the longer or shorter terms.
