Investigating Economic Opportunities Based on Strategic Economic Sectors: Applying Input–Output and Interregional Input–Output Models

Abstract

AbstractThis study investigates economic sectors’ opportunities based on strategic economic sectors, both the strength of the backward and forward linkages of economic sectors in an economic region and among economic regions. This study uses the Input–Output Model (IOM) and the Interregional Input–Output Model (IRIOM). The data are Input–Output Table and Interregional Input–Output Table in 2016. The results by using IOM show that, in terms of economic area, Aceh province has several strategic economic sectors and economic sectors’ opportunities (competitiveness) nationally based on dispersion power and sensitivity power. Generally, the electricity and gas procurement sector; and wholesale-retail trade, car repair, and motorcycles sector are the main economic sectors for Aceh province.The result of the IRIOM used, the electricity and gas procurement sector is an important economic sector for Aceh. This economic sector can absorb the output produced by other economic sectors, both from Aceh and also from other economic areas (North Sumatera province). Meanwhile, the manufacturing sector is an important sector for North Sumatera. However, trade between the two economic areas has not been profitable for Aceh. North Sumatra greatly benefits from this interregional trade. This condition underlines that the level of economic dependence of Aceh is high on the economic sectors of North Sumatra. The negative consequence of this trade form is the increasing level of economic inequality between the two economic regions. It is necessary to build a strong concept of domestic trade between mutually beneficial economic areas by applying the specialization of certain economic sectors of each economic region. In general, such policies can produce the formulation of a cycle of domestic economic interrelationships that revolves around the mutual benefit of all economic regions in Indonesia. At the same time, the policy has a positive effect on economic strength between regions and the national economy as a whole.KeywordsStrategic economic sectorEconomic sectors’ opportunityInput–Output ModelInterregional Input–Output Model