The Strategic Industry of East Java Economy

Abstract

East Java is one of the largest industrial areas and agglomerations in Indonesia. This study aims to estimate the role of strategic industries on the economic performance of the East Java region. The method used is the input-output quantitative analysis (IO). The data used is IO 2015. The data was obtained from the Central Bureau of Statistics (BPS). The results of IO estimation and analysis show that the strategic industrial sector in East Java is the vegetable oil industry, rice industry, flour and starch milling industry, bakery and cakes industry, cigarette industry, basic chemical industry, pharmaceutical industry, rubber industry and plastics and basic metal industries. A strategic industry is an industry that can drive performance from the supply and demand side. Strategic industries are grouped into agricultural, food and metals industries. The large number of strategic industries shows that the role of industry in building the regional economy is very strategic. This means that East Java industries have an impact on various economic sectors in East Java. Furthermore, the industry produces large-scale production in meeting intermediate inputs in other economic activities and final demand. As a result these key industries are able to generate and encourage regional economic performance. This proves that East Java is an industrial agglomeration region in Indonesia and has an impact on the economies of other regions in Indonesia.