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Leading Sector, Economic Structure and Competitiveness of Export Commodities Adi WIJAYA, Zainal ILMI, Dio Caisar DARMA / Journal of Business, Economics and Environmental Studies 10-3 (2020) 23-33 23 Print ISSN: 2671-4981 / Online ISSN: 2671-499X JBEES website: http://www.jbees.or.kr/ Doi: 10.13106/jbees.2020.vol10.no3.23 Economic Performance: Leading Sector, Economic Structure and Competitiveness of Export Commodities Adi WIJAYA1, Zainal ILMI2, Dio Caisar DARMA3 Received: January 15, 2020. Revised: January 23, 2020. Accepted: July 05, 2020 Abstract Purpose: The purpose of this study is for the leading sector, a pattern of shifting structure of the economic sector, and community export competitiveness on the economy Malinau Regency. Research design, data, and methodology: The type of data used is secondary data with a quantitative approach of 2009-2018. The study data used Location Quotient (LQ), Shift Share Analysis (SSA), and Revealed Comparative Advantage (RCA) analysis tools. Results: There are 6 leading sectors: agriculture; electricity, gas, and clean water; building and construction; trade, hotels, and restaurants. That has been classified has changed the economic structure of the Malinau Regency from the secondary sector to the tertiary and primary sectors in 10 years. While, community export competitiveness of the Malinau Regency through RCA Analysis, see if the export products of coal and excavation (types A, B, C) are shown to have a higher comparative advantage with comparative advantage. This shows that only a few commodities that can provide the good performance of export. Conclusions: Analysis of economic growth in the Malinau Regency after regional autonomy shows that there has been a shift in the economic structure of the economy which is dominated by the structure of the primary sector. Keywords : Leading Sector, Economic Structure, Export Commodity, Competitiveness JEL Classifications: A11, N1, H87, F12 1. Introduction 56 argues that, in a neoclassical economic world, the growth rate of a region (measured in per capita income) is inversely Clearly, the economic analysis of regional growth and its related to its initial per capita income, a thesis which offers distribution already has a long history and dates back to an optimistic perspective for poor regions. Interesting classical economists such as Marshall (1920). From an regional growth models have been extensively developed in analytical perspective, the foundations of modern economic the 1960s, in particular, in a neoclassical framework (Borts, growth theory can be found in the early work in which he 1960; Borts & Stein, 1964, 1968; Solow, 1965). The spatial-economic convergence idea has attracted considerable attention over the years and has generated 1 Head Lector, Department of Economics, Faculty of Economics interesting applied research on evolving convergence and Business, Mulawarman University, Indonesia. Email: versus persistent disparities (Barro & Sala-i-Martin, 1992; [email protected] 2 Senior Lecturer, Department of Management, Faculty of Wahyuningsih, Yunaningsih, Priadana, Wijaya, Darma, & Economics and Business, Mulawarman University, Indonesia, Amalia, 2020a). Email: [email protected] Exports provide an interface into how globally 3 Corresponding Author, Lecturer, Department of Management, competitive a country is. Likewise, a robust export base Sekolah Tinggi Ilmu Ekonomi Samarinda, Indonesia. Email: [email protected] secures a country against deteriorating current account balance. In general, exports facilitate the exploitation of © Copyright: The Author(s) This is an Open Access article distributed under the terms of the Creative Commons economies of scale, allow resource allocation according to Attribution Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any comparative advantage, improve foreign exchange reserves medium, provided the original work is properly cited. 24 Economic Performance: Leading Sector, Economic Structure and Competitiveness of Export Commodities position guaranteeing easy financing of imports, increase Malinau Regency in the 2014-2018 period was mainly efficiency and productivity through competition, increase supported by the primary structure consisting of: the employment, and allow for knowledge spill-overs that will agricultural sector, and the mining and quarrying sector to encourage domestic innovation. There is strong evidence in an average of 53.38%. Thus, these two sectors are the literature favoring exports as an important driver of considered to be the leading sectors in Malinau Regency. sustainable economic growth. It has also been proven in the Considering the potential of economic resources in the case of South Asian economies in general and Pakistan in contribution of Gross Regional Domestic Product (GRDP), particular (Kemal, Din, Qadir, Fernando, & Colombage, the largest primary structure, among others, comes from the 2002; Weiss, 2005). vast land area of the Malinau Regency forest (see Figure 1). Exports have long been the strength of the Indonesian economy. Indonesia in the Soeharto Era, known as the world's major oil producer and exporter. Indonesia entered the ranks of the 11 largest oil producers in the world. However, massive oil production throughout the New 24% Order period caused oil reserves to decline sharply. Since the 1980s, Indonesia has no longer dependent on oil and gas Primary sector exports, the non-oil and gas sector has dominated Secondary sector Indonesia's exports. This is evident from the role of non-oil 53% (gas exports) in 2015 reaching 87.65%. Several Indonesian Tertiary sector non-oil commodities can triumph in international markets is 23% plantation commodities such as palm oil, rubber, coffee, and cocoa. In addition, Indonesia's mining commodities can also control world market shares such as coal and natural gas (Darma, Haryadi, & Umiyati, 2015; Wahyuningsih, Yunaningsih, Priadana, Darma, & Purwadi, 2020b). Figure 1: Average Economic Structure in Malinau Another problem of Indonesian exports is export Regency, 2014-2018 (%) destination countries which are still concentrated in certain countries such as the United States, China, and Japan. As a The structure of the second largest economic sector result of dependence on the countries that mentioned is very comes from the tertiary structure which includes the trade, large. Any turmoil that occurs in the country will affect hotel and restaurant sector, the transportation and export performance. This turmoil is not limited only to communication sector, the financial sector, and leasing and economic turmoil but also the non-economic that occurs in business services, and the service sector with an average the country (Wijayanti & Darma, 2019). contribution of 23.84%. Meanwhile, the third position is the Malinau Regency is an area of division from Bulungan structure of the secondary economic sector consisting of: Regency based on Law of the Republic of Indonesia the industrial sector of processing, the electricity sector, gas Number: 22 of 1999 and Law of the Republic of Indonesia and clean water, and the construction sector with an Number: 47 of 1999. Malinau Regency is also part of the average contribution of 22.78%. North Kalimantan Province, which is also the result of the The next problem is that the existing economic growth is division of East Kalimantan Province in 2012. Since it has not yet known as economic sectors that have the potential only been formed in recent years, Malinau Regency still has for competitive and comparative competitiveness so that the shortcomings in terms of government, human resources, existing growth is only limited to quantitative figures. For infrastructure, facilities, and infrastructure. Until now, this reason, after the leading sector is known, it is continued, Malinau Regency is in a stage of regional development with the identification of sectors that have the potential for process. competitive and comparative competitiveness. The rate of economic growth in Malinau Regency over The objectives to be obtained from this study are to several periods (2014-2018) has experienced a downward identify: trend of 6.53%. The highest economic growth occurred in 2016, reaching 11.55%, and the lowest in 2018 of 3.67%. • Leading sectors in the economy of the Malinau However, in general, the Malinau Regency falls into the Regency region. very high category of regional economic growth (Tarigan, • The pattern of shifting structure of the economic 2005). sector in the economy of the Malinau Regency. Based on records from the BPS-Statistics of Malinau • Competitiveness of export commodities in the Regency (2019), the pattern of economic growth in the economy of the Malinau Regency. Adi WIJAYA, Zainal ILMI, Dio Caisar DARMA / Journal of Business, Economics and Environmental Studies 10-3 (2020) 23-33 25 2. Literature Review • That an area does not have to be an industrial area to be able to grow quickly, because the determining factor for regional growth is the comparative advantage (location 2.1. Leading Sector Theory advantage) that the region has. • The economic growth of a region will be This Leading Sector Theory is based on the export of maximized if the region concerned utilizes the comparative goods (commodities). The goals of developing this theory advantage it possesses into the strength of its export base. are to increase the rate of growth, job creation, and increase • Inequality between regions remains very large in income. The process
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