Abstract

The problems under study were: the sectoral GRDP growth and employment in West Sumatra Province and the factors that influence them, namely aggregate demand which consists: household consumption, government spending, investment, and net export. Increased sectoral GDP growth is the process of economic transformation necessary to increase employment in all sectors of the economy, both the primary, secondary and tertiary sector.The fundamental problems encountered in the process of economic transformation in West Sumatra Province are: the sectoral GDRP growth persistently low and the employment between economic sectors that was not optimal. Not yet known what components of aggregate demand that affecting the sectoral GRDP growth and how the implication in improving employment in West Sumatra Province. This study used explanatory method to explain the causal relationships in the model of sectoral GRDP growth and employment in West Sumatra Province through hypothesis testing. Data compiled in the time-series form in year period 1990-2012. The research model is formulated as a linear model and analyzed recursively using linear regression through ordinary least squares (OLS) method.The findings of research were: household consumption, government spending, investment, and net export affect simultaneously on the sectoral GRDP growth in West Sumatra Province. Partially, the GRDP growth of primary sector was more determined by the increase of household consumption and net export; the GRDP growth of secondary sector was more determined by the increase of household consumption, investment, and net export; while the GRDP growth of tertiary sector was more determined by the increase of household consumption and government spending. As an implication, the increasing of GRDP growths of primary, secondary, and tertiary sector boost employment simultaneously. While partially, the employment in West Sumatra Province was more influenced by the GRDP growth of tertiary sector. Keywords : aggregate demand, sectoral GRDP growth, employment

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