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Local Economic Planning Strategy Based On Sectoral Advantaged And Potential In Eastern Java Province


  • Rossanto Dwi Handoyo

    (Economic Faculty Of Airlangga University, Surabaya, Indonesia)


Legislation act no. 22/1999 about local government management and act no. 25/1999 about the balancing central and local government budgeting makes local authority to improve and widen their local development planning. The consequences of getting wider of local government planning to manage their own local potential capacity makes all initiative planning must come from local government themselves. The central government now has nothing to do with this. Now, the question is, are they well prepared to take this consequences? The purpose of this paper is to develop regional economic planning through sectoral oriented development model in Eastern Java Province. This paper uses dynamic Input-output model presented by Leontieff (1982), has been widely applied in many domestic and abroad researchers. As we know that Input-output model is static model. But, nowadays by simulating final demand components through the change in consumption, investment, government expenditure and net export, in input-output tabel, we can make it dynamic. In this paper, we make a simulating final demand by changing every single sector in Eastern Java Province 2000 input-output tabel using 10 percents. This paper also aims to figure out the economic problem facing East Java Province. The Disparities between Kabupaten/Kota can be seen from magnitude of economic variables, such as economic growth, percapita income, poverty level, and Human Development Index for each Kabupaten/Kota. This paper finds that industrial sector has the highest both forward and backward linkages. It means when the local government gives the policy which can improve the output sectoral will lead another sectors grow much faster than ever, especially fertilizer, pestiside and chemical industries; paper and stuffs from paper industries; unspecified things industries; non metal mineral things and cements industries; machines, electrial tools and shipment industries; iron and steel industries. Secondly, Sectors in Eatern Java that saved foreign exchange, independent and high value added are other aggricultural plant (sugar, coconut, clove, tobacco, coffee, tea, crude palm, rubber, and etc); fishery; poultry and its output; mining; food plants; food, beverages and tobaccoes industries; textile and garment industries. Thirdly, five sectors that can speed up economic growth faster are fertilizer and pesticide industries; chemical industries; rubber and plastics industries; paper industries and mineral things non metal industries. Fourthly, the sectors that able to generate highest income multiplier are all sub sectors in aggricultural sector and local government and defense. Finally, the sectors that able to generate highest employment multiplier are individual and household services sectors; local government and defense; trading sector; food and paddy plant sectors.

Suggested Citation

  • Rossanto Dwi Handoyo, 2005. "Local Economic Planning Strategy Based On Sectoral Advantaged And Potential In Eastern Java Province," Urban/Regional 0509004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpur:0509004
    Note: Type of Document - pdf; pages: 19

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    More about this item


    Local Sectoral Development Planning; Dynamic Input-Output Model; Final Demand Simulation Changing;

    JEL classification:

    • R - Urban, Rural, Regional, Real Estate, and Transportation Economics


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