The Development Model of Small-Industry in East Java: A Regional Comparative Study

"Objective � This study aims to compare the developmental model of small industry in both regions. Methodology/Technique � The economic growth of the northern region is relatively higher compared to their southern counterpart. It is thought that industrial zone policies, which tend to be northern-region oriented, is the trigger for this. Although the development of small industries in the southern region of East Java is quite significant and able to absorb many workforces, it is still unable to boost the economic growth of the region. This research uses a shift share analysis method and a sample of regencies and cities in both regions. Findings � The result of the shift-share analysis model shows that the processing industry and wholesale and retail industry are basic sectors that can enhance the economic growth of both regions. Each industry is significantly shifted to a basic sector. Local governments have established clusters of small and medium businesses, such as earthenware, ceramics, snack, furniture, rattan craft, and stoneware industrial centres. Several other industrial sectors show significant contributions following the implementation of industrial zone policies. This suggests that the establishment of industrial zones is able to boost the region's economy and reduce disparities. However, small industries are low in capital accessibility, skills, and production technology. Therefore, to maintain the sustainability of industrial development, policies implemented by the government should focus on developing small businesses by improving their capital accessibility, skills, and technological proficiencies. Novelty � East Java's economy has shown a significant growth in recent years. Unfortunately, the growth across the region is still irregular. The disparity at the regional level, particularly between the northern and southern regions of East Java, is still prevalent."