This paper discusses the regional economic development of Yogyakarta, a former Indonesian capital city carrying dynamic change over the past forty years. Government policy to build massive infrastructure was crucial to starting the agglomeration of Yogyakarta as a central city. According to the New Economic Geographic perspective, this paper shows that Sleman, as a medium-level suburban area becomes a shadow urban for Yogyakarta, whereas the urban Yogyakarta and Sleman suburban have become indifferent and borderless over recent years. Spatially, this economic transformation indicates a shifting perception of economic power among the regions. This paper examines the economic development in urban Yogyakarta using data triangulation in analysis. The finding shows that their Gross Regional Domestic Product (GRDP), economic activities, and regional populations were increasingly dispersed into its suburban areas. Thus, distributing potential markets all over regions should be concerned in planning and regional development in Yogyakarta. This argument is consistent with the spirit of inequality alleviation between urban and suburbs toward a convergent economy. © 2022, The Author(s), under exclusive licence to Springer Nature B.V.