Abstract
The Agricultural Demand Led Industrialization (ADLI) strategy can be considered effective because of the dominant amount of East Java land (74.11%) cultivated for the agricultural sector. This study aims to determine the relationship between the agricultural and manufacturing industry sectors; knowing the impact of the “Agricultural Demand Led Industrialization” (ADLI) strategy in the East Java economy; and knowing the elasticity of agricultural investment on output creation, gross value added, and income in East Java. This research uses the Input-Output (IO) analysis technique for all economic sectors in East Java, with an emphasis on the agricultural sector and processing industry in 1995-2010. The empirical results state that the ADLI Strategy has a positive impact on output creation and income in the East Java economy. The level of sensitivity /response from the output, gross value added, and income due to changes in investment value in the agricultural sector is relatively not much different.
Highlights
Industrialization policies have been implemented by local government of East Java to solve the problems of poverty and income inequality
Intermediate input is raw material for the sectors either goods or services, which are used in the production process
This indicates that the agricultural sector and the processing industry have a fairly close relationship (Rosgandha,2000)
Summary
Industrialization policies have been implemented by local government of East Java to solve the problems of poverty and income inequality. Gerbangkertosusilo industrial development program is a concrete step that shows the seriousness of regional governments in implementing industrialization to accelerate regional economic development. In accordance with the Provincial Regulation of East Java No.4 / 1996 on Province Spatial Planning (RTRW) and PP No.47 / 1996 (Pemprov Jatim, 2010) on the national spatial plan, Gerbangkertosusila aims to realize the equitable distribution of inter-regional development in East Java, and in turn the problems of poverty and income inequality can be resolved properly. In addition to development programs to solve the problem, the government can adopt some strategies for implementation including Import Substitution Industrialization (ISI) strategy, Export Led Industrialization (ELI) strategy, and Agricultural Demand Led Industrialization (ADLI) (Susilowati, 2008)
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