Analysis Of Superior Sector, Sector Shift And Causality Between The Economic Sectors Of North Sumatra Province

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Analysis of Superior Sectors and Causality between the Economic Sectors of North Sumatra Province

Economic development is a crucial aspect of building a prosperous society, and it is an effort to create capital on a sufficient scale to increase productivity in various sectors such as agriculture, industry, and trade. This capital is also needed to establish social infrastructure such as schools and hospitals. The essence of economic development is the creation of capital that supports social and economic development. According to Arsyad (2001), regional economic development is a process in which local governments together with the community manage existing resources and build partnerships with the private sector to create progress.

Research Purposes

This research aims to:

  1. Analyze the Agricultural Sector, Processing Industry, Trade, Hotels and Restaurants: These sectors are the leading sectors in the economy of North Sumatra Province, and understanding their dynamics is crucial for economic growth.
  2. Analyze the Shift in the Economic Sector: The shift in the economic sector in North Sumatra Province is a significant aspect of this research, as it will help identify the sectors that are driving economic growth and those that are lagging behind.
  3. Analyze Causality between Economic Sectors: Understanding the causality between economic sectors is essential for identifying the relationships between sectors and how they impact each other.

Research Methodology

The data used in this study are secondary data in the form of quantitative time series from 2003 to 2012, obtained from the Central Statistics Agency (BPS), journals, and other reading sources. The methodology used includes:

  • Location Quotient (LQ): This method is used to analyze the contribution of each sector to the regional economy.
  • Shift Share: This method is used to analyze the shift in the economic sector in North Sumatra Province.
  • Causality Granger Analysis: This method is used to analyze the causality between economic sectors.

Research Results

The results of the study revealed several important findings as follows:

  1. Leading Sector: Agriculture, Processing and Trade Industry Sector has proven to be a leading sector in the economy of North Sumatra Province. Each of these sectors has a significant contribution to regional economic growth.
  2. The Shift in the Economic Sector: There is an increase in aggregate in economic output between 2003 and 2012. However, this increase is largely influenced by economic growth at the national level. Meanwhile, the manufacturing industry sector shows a negative influence on economic growth in the Province of North Sumatra.
  3. Causality between Sectors: Research found that there is a causality relationship between sectors, where the agricultural sector has a relationship with the electricity sector, the electricity sector affects the trade and industrial sector, and the trade sector is related to the mining sector. In addition, the banking sector has a causality relationship with the service sector.

Additional Analysis and Explanation

The results showed the importance of understanding the dynamics between sectors in the economy of North Sumatra Province. With the agricultural sector that is the foundation, the growth of this sector affects other sectors such as electricity and trade, which then contributes to the overall economic growth. The negative influence of the manufacturing industry sector may indicate the challenges faced by this sector, such as efficiency problems, investment that is not optimal, or incompatibility between products produced and market demand.

It is essential for local governments and stakeholders to focus on increasing the competitiveness of superior sectors and encouraging cooperation between the public and private sectors. Strategic steps such as improving infrastructure, provision of training for labor, and support for small businesses can help maximize the potential of each sector in encouraging sustainable economic growth in North Sumatra Province.

By understanding the sector shift patterns and causality relations between sectors, economic policies can be directed to strengthen sectors that have high growth potential while overcoming weaknesses in less productive sectors. This will produce a greater positive effect on the overall regional economy.

Conclusion

In conclusion, this research aims to analyze the superior sectors and causality between the economic sectors of North Sumatra Province. The results of the study revealed that the agricultural sector, processing industry, and trade sector are the leading sectors in the economy of North Sumatra Province. The shift in the economic sector in North Sumatra Province is largely influenced by economic growth at the national level. The causality between sectors is also an essential aspect of this research, as it helps identify the relationships between sectors and how they impact each other.

Recommendations

Based on the results of the study, the following recommendations are made:

  1. Increase the competitiveness of superior sectors: Local governments and stakeholders should focus on increasing the competitiveness of superior sectors such as agriculture, processing industry, and trade sector.
  2. Encourage cooperation between the public and private sectors: Encouraging cooperation between the public and private sectors can help maximize the potential of each sector in encouraging sustainable economic growth in North Sumatra Province.
  3. Improve infrastructure: Improving infrastructure such as roads, ports, and airports can help increase the efficiency of each sector and contribute to overall economic growth.
  4. Provide training for labor: Providing training for labor can help increase the productivity of each sector and contribute to overall economic growth.
  5. Support small businesses: Supporting small businesses can help increase the competitiveness of each sector and contribute to overall economic growth.

By implementing these recommendations, local governments and stakeholders can help maximize the potential of each sector in encouraging sustainable economic growth in North Sumatra Province.
Frequently Asked Questions (FAQs) about the Analysis of Superior Sectors and Causality between the Economic Sectors of North Sumatra Province

Q: What is the main objective of this research? A: The main objective of this research is to analyze the superior sectors and causality between the economic sectors of North Sumatra Province.

Q: What are the leading sectors in the economy of North Sumatra Province? A: The leading sectors in the economy of North Sumatra Province are the agricultural sector, processing industry, and trade sector.

Q: What is the shift in the economic sector in North Sumatra Province? A: The shift in the economic sector in North Sumatra Province is largely influenced by economic growth at the national level. However, the manufacturing industry sector shows a negative influence on economic growth in the Province of North Sumatra.

Q: What is the causality between sectors? A: Research found that there is a causality relationship between sectors, where the agricultural sector has a relationship with the electricity sector, the electricity sector affects the trade and industrial sector, and the trade sector is related to the mining sector. In addition, the banking sector has a causality relationship with the service sector.

Q: What are the implications of this research? A: The implications of this research are that local governments and stakeholders should focus on increasing the competitiveness of superior sectors and encouraging cooperation between the public and private sectors. Strategic steps such as improving infrastructure, provision of training for labor, and support for small businesses can help maximize the potential of each sector in encouraging sustainable economic growth in North Sumatra Province.

Q: What are the recommendations of this research? A: Based on the results of the study, the following recommendations are made:

  1. Increase the competitiveness of superior sectors: Local governments and stakeholders should focus on increasing the competitiveness of superior sectors such as agriculture, processing industry, and trade sector.
  2. Encourage cooperation between the public and private sectors: Encouraging cooperation between the public and private sectors can help maximize the potential of each sector in encouraging sustainable economic growth in North Sumatra Province.
  3. Improve infrastructure: Improving infrastructure such as roads, ports, and airports can help increase the efficiency of each sector and contribute to overall economic growth.
  4. Provide training for labor: Providing training for labor can help increase the productivity of each sector and contribute to overall economic growth.
  5. Support small businesses: Supporting small businesses can help increase the competitiveness of each sector and contribute to overall economic growth.

Q: What are the limitations of this research? A: The limitations of this research are that it is based on secondary data and may not reflect the current situation of the economy of North Sumatra Province. Additionally, the research only focuses on the superior sectors and causality between sectors, and may not consider other factors that may affect the economy of North Sumatra Province.

Q: What are the future research directions? A: Future research directions may include:

  1. Investigating the impact of government policies on the economy of North Sumatra Province: This research can help identify the effectiveness of government policies in promoting economic growth in North Sumatra Province.
  2. Analyzing the role of small and medium-sized enterprises (SMEs) in the economy of North Sumatra Province: This research can help identify the contribution of SMEs to the economy of North Sumatra Province and their potential for growth.
  3. Examining the impact of globalization on the economy of North Sumatra Province: This research can help identify the impact of globalization on the economy of North Sumatra Province and its potential for growth.

By understanding the superior sectors and causality between the economic sectors of North Sumatra Province, local governments and stakeholders can make informed decisions to promote sustainable economic growth in the province.