Journal of Critical Reviews

ISSN- 2394-5125 Vol 7, Issue 9, 2020

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST PROVINCE,

Muh Firmansyah1*, Tridoyo Kusumastanto2, 3, Heti Mulyati4

1Master Student, Tropical Ocean Economics, Department of Resource and Environmental Economics, Faculty of Economics and Management, IPB University, Bogor, Indonesia 2Graduate Program in Tropical Ocean Economics, Faculty of Economics and Management, IPB University, Bogor, Indonesia 3Center for Coastal and Ocean Resource Studies, IPB University, Bogor, Indonesia 4Department of Management, Faculty of Economics and Management, IPB University, Bogor, Indonesia Email: [email protected]*

Received: 19.03.2020 Revised: 04.04.2020 Accepted: 13.05.2020

Abstract Development of the ocean economy (particularly port) is one of the important components in improving regional and national economic competitiveness in Indonesia as an archipelagic state. Province as a major contributor to the national economy has not been able to optimize the port's potential. This can be seen from the East Java 2017 trade balance which has a deficit. Whereas the Port (sea transportation sector) in East Java Province, which is one of the sectors with the second largest multiplier, is 2,178. This study aims to identify leading economic sectors that can encourage increased port throughput activities. Export activities related to the port throughput that can improve the trade balance deficit in East Java. The method used in this research is Shift Share Analysis (SSA) and Location Quotient (LQ) using secondary data from GRDP 2014 - 2018. The results of the SSA analysis show that the highest NEij, IMij, and CEij components are manufacturing (NEij = 80977.5), information and communication (IMij = 12730.5), and manufacturing industries (CEij = 25566.1). Based on LQ analysis, the basic sectors in East Java Province with LQ values > 1 are wholesale and retail trade (1.67), manufacturing industries (1.64), Accomodation and food services (1.54). The five main export commodities in the economic sector in East Java Province include agriculture (fish and shrimp, oily seeds, animal product), mining (crude oil), manufacturing industries ( jewelry, copper, wood, animal fat). The development of economic policy in East Java needs to foster comparative and competitive advantages such as investment, efficiency and technology, and minimize imported content.

Key words: Regional economic, port development; leading sector; location quotient; shift share

© 2020 by Advance Scientific Research. This is an open-access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/) DOI: http://dx.doi.org/10.31838/jcr.07.09.69

INTRODUCTION providing accommodation and drinking meals (5.75%), and The current economic development is closely related to global others (24, 44%) (East Java Central Bureau of Statistic, 2018). trade and the process of transporting cargo which is closely related to the development of ports. All activities of landing, Although as one of the main contributors to national economic trading, and distributing goods to consumer areas between growth the economy of East Java is fully good. During the regions are carried out through ports (Lubis 2012). The level period of 2011-2018, East Java Province has always of trade both overseas and inter-island trade can affect the experienced a trade alance deficit except in 2016. The Central amount of loading and unloading of cargoes at the port Bureau of Statistic (2018) noted that until the end of 2018, the (Grossman 2006). Ports can support local and national trade balance of East Java Province was a deficit of 5.34 billion economies, encourage industrial development, provide jobs - US dollars. both directly and indirectly - for local residents and generate The total number of goods unloaded in the four main ports of income for local governments. (Richardson and Heidelberg East Java reached 30.66 million tons in 2016 to 36.32 million 2012). tons in 2017. The opposite happened to goods loaded. Total Economic development in Indonesia requires a number of cargoes loaded reached 9.79 million tons in 2016 to 8.97 macro and micro economic policy policies that do not rule out million tons in 2017 (-8.42 percent). This shows that East Java the existence of ports. This is because geographically has not fully utilized its advanced. Based on the Input Output Indonesia is an archipelago with 2/3 of its territory is ocean. (I-O) Table of East Java Province, sea transport sector (Code Kusumastanto (2002) emphasized that the importance of Sector 88) is the sector with second largest output multiplier developing a vision for the ocean economy in Indonesia is very in East Java with a multiplier number of 2.178. high considering its potential. Ocean economics sector has a Cargo availability includes factors that influence port large prospect with 20.6 % contribution to national development (Großmann et al. 2006). The port of goods will development. In addition to experiencing a significant increase play a role in the local economy when the flow of loading and compared to other sectors, Gross Domestic Product (GDP) unloading of goods at the port is high. (Park and Seo 2016). value of the ocean sector at current prices since 1995 showed Need for interrelated policies to support a sustainable an increase. economy, including encouraging the competitiveness of Indonesia's economic growth is largely supported by the domestic products for exports. economy in Java. In 2017, Java Island accounted for around Economic base theory states that the rate of economic growth 58.49% of the national economy with East Java contributing in a region is determined by the large increase in exports from 14.86% and placing East Java in third place as a contributor to the region. These activities are grouped into base and non-base national economic growth (BPS, 2018). The amount of value activities (Glasson 1977). Based on what has been disclosed added produced in East Java was not apart from the role of 38 above, it is necessary to know the economic sectors that can be districts / cities with diverse geographical and socio-cultural developed in the port hinterland area to produce cargo and conditions between regions. The economic structure of East increase demand for port services. Research on economic Java is formed by the processing industry (29.03%), large and structure and identification of leading sectors in an area is retail trade; car and motorcycle repairs (18.18%), agriculture, important to support port development and regional forestry, and fisheries (12.80%), construction (9.79%), development planning. Many of these studies have been

Journal of critical reviews 316

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

carried out including Nikijuluw (2013) identifying leading 퐸푖퐽 = GDRP’s sector in East Java sectors in Maluku, Muslims (2017) analyzing the advanced of 퐸퐽 = Total GDRP’s sector in East Java the agricultural sector and economic structure in West Nusa 퐸푖푁 = GDP’s sector i in Indonesia Tenggara. Khusaini (2015) uses shift-share analysis to identify 퐸푁 = GDP’s total sector in Indonesia the competitive advantage of . As noted by Hoppes (1991), sector sectors in a region have the potential criteria for determining the base sector is the LQ value <1, then to help local policy makers. Some researchers attribute the sector is a non-base sector, whereas if LQ> 1, then the regional superiority to the development of transportation sector is the base sector. infrastructure (toll roads and ports) Berawi et. al (2017) uses Location Quotient (LQ) analysis to identify the leading sectors RESULTS AND DISCUSSION in the development of the trans-Sumatra toll route. Mandasari Economic Structure in East Java et .al (2018) uses LQ analysis in the context of port Foreign trade in East Java Province during 2014-2018 development policies in Aceh province. experienced a fluctuating trend. In 2018 an increase in exports and imports in the province of East Java. an increase in exports METHODS was recorded at 3.95 percent, while imports increased by This study aims to identify the leading economic sector that 16.35 percent compared to 2017. The increase in import can be a port cargo support. Port loading activity is related to activity that was greater than the export activity caused the exports which can reduce the trade balance deficit in East Java trade balance of the east java province return to the deficit. Province. Loading (export) activities related to the primary During 2008-2015 the increase in import value was always and secondary economic sectors. Therefore this study focus on greater than the value of exports. The development of exports primary and secondary economic sectors that related with and imports had shown a better development in 2016 because port cargo (export activities). This study also uses descriptive it showed a trade balance surplus, but in 2017 and 2018 the and quantitative methods. The descriptive approach is used to trade balance of East Java again experienced a deficit as before. explain the results of quantitative data processing. The data The economic development of East Java Province was obtained used in this study are time series data from 2014 to 2018. from changes in economic structure due to economic Indonesia's Gross Domestic Product, East Java’s Gross development that was carried out continuously and followed Regional Regional Product (GDRP), and District/City in East by economic growth in the region. These changes can be seen GRDP in East Java Province. The data used is secondary data from the change in the role of each economic sector in the obtained from the East Java and Indonesia Central Bureau of GRDP. East Java's economy in 2018 generates added value at a Statistics. Secondary data in this study were processed and constant price of 1,564 trillion. This value is equivalent to calculated using Location Quotient (LQ) and Shift Share 14.76 percent of the national economy, slightly lower than in Analysis (SSA). 2017 which was 14.81 percent. Manufacturing industry;

wholesale and retail trade, car and motorcycle repair and Shift Share Analysis agriculture, forestry and fisheries sector are the biggest The shift-share method is based on Dunn (1960), describing contributors in the economy of East Java. In 2018, the three local economic growth into three effects: national growth business fields contributed 59.82 percent to the GRDP of East effects, industrial mix effects, and competitive effects. The Java, lower than in 2017 which amounted to 59.89 percent formula for calculating shift share is: (Central Bureau of Statistic 2018). 푡 푁퐸푖푗 = 퐸푖푗 ∗ 푔oo 푡 The economic structure of East Java Province until 2018 is still 퐼푀푖푗 = 퐸푖푗 ∗ (푔푖표 − 푔표표) dominated by manufacturing industries sector. In 2018 the 푡 퐶퐸푖푗 = 퐸푖푗 ∗ (푔푖푗 − 푔푖표) role of the manufacturing industries sector (29.73%) is greater So than other sectors, especially agriculture, forestry, and 푡+1 푡 ∆퐸푖푗 = 퐸푖푗 − 퐸푖푗 fisheries (11.9%). It shows that the economy of East Java ∆퐸푖푗 = 푁퐸푖푗 + 퐼푀푖푗 + 퐶퐸푖푗 Province is advanced. The wholesale and retail trade, car and where: motorcycle repair sectors are the second largest sector with 18.9%. Third largest sector is agriculture, forestry and 푁퐸푖푗 = national growth effect, sector i, district j fisheries sectors by 11.9%. The role of other sectors in East 퐼푀푖푗 = industrial mix effect, sector i, district j Java Province's GRDP in 2018 is less than 10%. Shift share 퐶퐸푖푗 = competitive effect, sector i, district j 푡 analysis is carried out to explain the factors causing changes in 퐸푖푗 = income, sector i, district j, base year 푡 economic structure during the 2014-2018 period. Shift share 퐸푖푗 = income, sector i, district j, final year explains several components of regional growth consisting of 푔표표 = national growth rate (average sector) components of National/Regional Growth (NEij), Proportional 푔푖표 = national frowth rate, sector i Growth/Industial Mix (IMij), and Components of Regional 푔푖푗 = regional growth rate, sector i Share Growth / Competitive Effect (CEij). These three components influence the growth of the economic sector in a Location Quotient region. Location Quotient (LQ) analysis is used to determine the leading economic sector in East Java Province which covers Although there is a temporary impression that the seventeen (17) sectors. But in this paper only explain the manufacturing industries sector is a fast-growing sector, based economic sectors that related to the port throughput (primary on the Shift Share Analysis (SSA) results indicate that the and secondary sectors). The results of the analysis will show sector in East Java Province is not an advanced sector. This that a sector is classified as base or non-base. The formula for situation is reflected in the value of the Industrial Mix (IMij) calculating LQ based on Bendavid-Val (1991) is: component which is negative at -11951.9. the other sector in the East Java Province with negative value in industrial mix are 1. Determination of advanced sector in provincial mining and quarrying (-13082.9), wholesale and retail trade (- level 11032.8), agriculture, forestry and fisheries (-9326.2), public 퐸푖퐽⁄퐸퐽 administration, defence and social security (-1039), and real 퐿푄푖 = … … … … … 푖 = 1,2 … 17 퐸푖푁⁄퐸푁 estate (-1038.7). where : 퐿푄 = Location Quotient (LQ) coefficient, economic sectors in East Java

Journal of critical reviews 317

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

Table 1 Results of Shift Share Analysis (SSA) calculation based on economic sectrs in East Java (2014-2018)

Almost all economic sectors in East Java Province have low Primary Sector in East Java competitiveness in their own territory. This situation is The core of base economic model is to explain that the reflected by the value of Regional Share Growth (CEij) for some direction and growth of an area is determined by regional sectors with negative value, except 1) manufacturing exports. Export itself is not limited to the form of goods and industries (25566.1), 2) mining and quarrying (21540.1), 3) services, but in the form of expenditures of foreigners in the wholesale and retail trade (21132.5) 4) accommodation and region on immovable goods and services (Budiharsono 2001). food services (8519.6), 5) real estate (1078.8) 6) education Table 2 shows LQ value that define the base sectors (average (662), 7) water supply, sewerage, waste management and from 2014-2018) in East Java Province are 1) wholesale and remediation (5.3). Agriculture, forestry and fisheries sector retail trade (1.58), 2) manufacturing industries (1.55), 3) has the smallest (CEij) component in East Java Province with a accommodation and food services (1.46), 4) information and value of -16491.5. The negative marked sector shows that the communication (1.18). Whereas based on the LQ value of 2018 sector is unable to compete with products from outside which the basic sectors are 1) wholesale and trade; repair of motor enter East Java Province. Not entirely the market share of the vehicles and motorcycles (1.57), 2) manufacturing industries region can be controlled by the sector with the negative sign. (1.57) 3) accommodation and food services (1.52), 4) For sectors that have positive value, it is clear that the highest information and communication (1.13). The increasing competitiveness in the region's market share is the number of base sectors in 2018 shows that the economy of manufacturing industries with the CEij component value of East Java experienced a significant increase in exports and 25566.1, the mining and quarrying sector amount to 21540.1, economic growth. and wholesale and retail trade at 21132.5.

Table 2 Results of Location Quotient (LQ) based on economic sectors in East Java (2014-2018)

Journal of critical reviews 318

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

Table 3 Results of Location Quotient (LQ) and Shift Share Analysis (SSA) based on primary sector in East Java

Primary sector is an economic sector that utilizes natural Secondary Sector in East Java resources directly. This sector includes 1) agriculture, forestry, Secondary sector is the economic sector which processes fisheries, and 2) mining and quarrying. Based on the economic primary sector products (raw material) into product, such as structure, the primary sector in East Java has good regional manufacturing and construction. The economic sectors growth component (NEij). It shows from the agriculture sector included in the secondary sector are 1) manufacturing (33882.49) and mining and quarrying (13154.07). Mining and industries, 2) electricity and gas, 3) water supply, waste quarrying sector are consist of 1) crude petroleum, natural gas management and remidiation, 4) construction. Based on LQ and geothermal, 2) coal and lignite, 3) Iron ore, and 4) other value in 2018, Secondary sector that classified as leading mining. Mining and quarrying have categorized as non base sector are manufacturing industries (1.55) and water supply, sector in 2018 and average (2014-2018) with LQ value of 0.74 sewerage, waste management and remediation (1.22). and 0.56. East Java Province does not have coal and lignite Manufacturing sector is a sector that is closely related to port mining activities and very few iron ore mining activities (LQ = throughput activities. The sector has activities in the form of 0.00). Based on average LQ value, Leading sub-sector in mining importing raw products to be processed or export for their and quarrying are crude petroleum (1.15). In 2018, only one products. sub-sector in mining and quarrying categorized as leading sub- sector with LQ > 1 that shown TABLE 3. Leading sub-sector Manufacturing industries has the highest NEij component in from mining and quarrying categories is crude petroleum, secondary sector with value of 80977.52 followed by natural gas and geothermal (LQ = 1.15). Crude petroleum, construction (25337.96), electricity and gas (988.54), and natural gas and geothermal mining has a higher growth than water supply, sewerage, waste management and remediation national growth (NEij = 8958.1) and included as competitive (268.41). Based on industrial mix component, 1) construction sub-sector (CEij = 19889.5). All sub-sector in quarrying and and 2) water supply, waste management and remediation mining are included as non advanced sub-sector with negative classified as an advanced sector with value of 5874.29 and value of industrial mix. 7.60. Based on LQ value 2018, Leading sub-sector from manufacturing industries are 1) tobacco (4.19), 2) furniture Agriculture, forestry and fisheries categorized as non base (3.41), 3) wood, cork, articles of straw and plaiting materials sector in 2018 with LQ value of 0.91 also in average LQ (2014- (2.61), 4) paper printing and reproduction of recorder media 2018) categorized as non-base sector (0.95). In 2018, some (LQ = 1.93), 5) other non-metalic mineral (1.82), 6) other sub-sector in agriculture are leading sub-sector with LQ > 1 manufacturing (1.76), 7) rubber and plastics (1.75), 8) basic that shown TABLE 3. Leading sub-sector in East Java are metal (1.64), 9) food and beverages (1.42), 10) chemical, livestock (1.48), food crops (1.21), and fisheries (1.00). All pharmaceutical, and botanical products (1.40), 11) leather and leading subsectors of the agricultural sector have positive NEij footwear (1.38). TABLE 4 show the result of Shift-Share components. The food crops sub-sector has NEij value of Analysis (SSA) and Location Quotient (LQ) from secondary 10805.03, followed by livestock (6460.65), and fisheries sector. (6253.66). Fisheries sub-sector is the only sub-sector that is classified as advanced because it is positive with the value of The highest NEij component is manufacturing industries are the Industrial Mix (IMij) component of 1281.08. Based on the food and beverages (22117.21), tobacco (19500.37), and CEij component shows that there is no subsector of the chemical, pharmaceutical, and botanical products (7292.70). agricultural sector category with a positive CEij value. This While the lowest NEij component are machinery and shows that the sub-sector in agriculture has no equipment (154.25), coal and refined petroleum (213.06), and competitiveness and inferior in East Java Province market other manufacturing (888.95). Food and beverages also share. classified as an advanced sub-sector based on industrial mix component. The highest value of industrial mix component are

Journal of critical reviews 320

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

food and beverages wit IMij value of 15821.41 and followed by IMij component. whereas the sub-sectors of manufacturing basic metal (358.46), leather and footwear (196.01), and industries that have the lowest IMij value are 1) wood, cork, machinery and equipment (62.82). the remainder is classified article of straw and reproduction of recorder media (-4916.6), as a sub-sector that is not advanced because it has a negative 2) tobacco (-3577.32), and 3) rubber and plastics (3275.1).

Table 4 Results of Loacation Quotient (LQ) and Shift Share Analysis (SSA) based on secondary sector in East Java

Most of the manufacturing industry sub-sectors are classified the linkages between the primary sector (agriculture and as competitive. this is indicated by the CEij component values mining) and the manufacturing sector. If the processing which are positive. Based on competitive effect (CEij), the most industry minimizes input from outside the region, this will competitive sub-sector in manufacturing industries is food and reduce East Java's trade balance deficit. Food crops, livestock beverages sub-sector with value of 13591.09 and followed by and fisheries sub-sector is a leading sub-sector in East Java tobacco (CEij=4859.54), paper printing and reproduction of Province with a LQ > 1. recoreder media (CEij=3461.06), other non-metalic mineral (CEij=2594.25), textiles and wearing apparel (CEij=968.01), Fisheries sub-sector is a sector with a value of LQ > 1 in 2014 basic metal (CEij=405.14), leathr and footwear (CEij=320.92), but the condition continues to decline so that it is no longer a coal and refined petroleum (213.84), wood, cork, articles of leading sub-sector in 2018. Main commodities from fisheries straw and plaiting materials (CEij=115.74), furniture sector is fish and shrimp (HS 03) with export value in 2018 (CEij=83.81), and other manufacturing (CEij=78.49). of 1 151.60 million dollars. Food crop and livestock sub-sector also experienced a decline in LQ value year by year in East Java Leading Economic Sector Development with Export- Province. Main commodities from food crops sub-sector in Oriented 2018 are oily seeds (HS 12) with export value 112.22 million East Java Province needs to pay attention to policies on leading dollars, vegetables (HS 07) worth 51.52 million dollars, economic sectors in its region, especially in export-oriented vegetable ingridients (HS 14) amount of 6.60 million dollars, sector. The main export goods from primary and secondary and wheat (HS 10) with value 0.93 million dollars. While the sector showed in Table 5 and Table 6. Based on the results of main commodities from livestock are milk, butter, egg (HS 04), analysis on the primary and secondary sectors, manufacturing meat (HS 02), animals product (HS 05), and living animal (HS industry are the leading sectors in East Java. This also implies 01). In 2018, Each of these commodities contributed 137.58 that the East Java economy moves from the traditional million dollar, 10.43 million dollar, 9.65 million dollar, and 0.49 economy to the modern economy. Leading sectors in East Java million dollar. in this paper explained with LQ value and export statistics data Mining and quarrying sector is non base sector in East Java based on East Java Central Bureau of Statistics The LQ value of Province (LQ < 1). However oil, gas and geothermal mining sub- the agricultural sub-sector continues to decline from the year. sectors are categorized as base sector with 1.15 of LQ value. in The East Java Provincial Government needs to pay attention to 2018 the export value of crude oil reached 1 277.43 million

Journal of critical reviews 320

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

dollars. Based on Dahkelan et. al (2017) Reserves and oil and are contributed by oil and gas blocks operating in the districts gas industry activities in eastern Java mostly in the region of of Sampang-Madura, Gresik, Bojonegoro, Sumenep, Bangkalan Madura, Cepu, Bojonegoro, Sidoarjo and others in Tuban. most and Sidoarjo. Most of the gas block production in East Java is in of the 40 oil and gas blocks are still in the exploration phase, the sea area between 4 to 12 nautical miles, which is a gas block and there are 12 blocks that have been in production. Cepu oil area operated by Santos in Sampang and other blocks in block in which is operated by Mobile Cepu Madura. Next, the contributors of natural gas production are Limited (Cepu Ltd) is the biggest contributor to petroleum Petrochina Unitisasi (Technical Assistant Contract - TAC) and production in East Java, especially after reaching peak Pertamina Hulu Energi - West Madura off-shore (PHE-WMO). production in 2014. Then followed by Sukowati block operated Main export goods of mining and quarrying sectors showed in by Pertamina EP, Pangkah by Saka, Kodeco Poleng by Table 5. In 2018, the main export commodities from the mining Pertamina EP, and JOB PPEJ in the Tuban and Bojonegoro areas. and quarrying sector are mineral fuel (HS 27) with export value In addition, natural gas reserves and production in East Java 1 278.12 million dollars Table 5 Main export commodities from primary leading sector in East Java Province (million USD)

Table 6 Main export commodities from secondary leading sector in East Java Province (million USD)

Manufacturing industry as a leading sector (LQ > 1) in East Java coal and refined petroleum (0.03); textile and wearing apparel Province needs to get a government policy boost. Almost all (0.38); fabricated metal, computer, electronic, optical and manufacturing sub- sectors as a base sector (LQ > 1) except electrical equipment (0.66), machinery and equipment (0.16),

Journal of critical reviews 320

ECONOMIC DEVELOPMENT ANALYSIS FOR IMPROVING PORT THROUGHPUT AND REGIONAL ECONOMIC GROWTH IN EAST JAVA PROVINCE, INDONESIA

and transportation equipment (0.18). Main export goods of the sector is unable to compete with commodities from outside manufacturing industries sectors showed in Table 6. However, which enter East Java Province some of the base industries have industrial mix and competitive effect that are negative. Based on, Daryanto and REFERENCES Hafizrianda (2010), industrial mix that are negative could 1. Berawi, M.A, Zagloel, T,Y, Miraj, P,M, Mulyanto, H. happened because of sub-sectors differeces in final demand, (2017). Producing concept for the trans-sumatera toll availability of raw materials, industrial policies (eg marketing road project development using location quotient policies, industrial institution, taxation, subsidies, price method. Procedia Engineering. 171, 265-273. support, etc.), therefore the government needs to fix existing 2. Bendavid-Val., A. (1991). Regional and Local industrial system. Negative CEij components indicate that Economic Analysis for Practitioners, Fourth edition, sector is unable to compete with products produced from United States: Prager Publisher. outside East Java. Therefore to improve the component of 3. Budiharsono, S. (2001). Coastal and Ocean Region competitiveness (CEij), industrial policies are needed to Development Analysis Techniques. Jakarta: PT Pradnya reduce the import content. Paramita. 4. Central Bureau of Statistic. (2018). Gross regional The existence of the manufacturing industries in East Java domestic product of district/city in Jawa Timur Province which is classified as a leading sector is indeed very province by industry 2013-2017. , Indonesia: promising. This is because East Java has the six largest Author. industrial zones spread across several districts/cities. The six 5. Central Bureau of Statistic. (2018). Gross regional industrial estates are PT. Surabaya Industrial Estate Rungkut domestic product of provinces in indonesia by industry (SIER) in the city of Surabaya, PT. Industrial Estate 2013-2017. Jakarta, Indonesia: Author. Rembang (PIER) and Ngoro Industri Persada (NIP) in 6. Daryanto, A and Hafizrianda, Y. (2010). Quantitative Pasuruan district, Gresik Industrial Estate (KIG) and PT models for regional economic development planning - Maspion Industrial Estate (MIE) in Gresik district, as well as concepts and applications. Indonesia: IPB Press Sidoarjo industrial estate berek (SIEB) in Sidoarjo district. 7. Dahkelan, Huda M, and Lumbahtoruan M. (2017). Main export goods of manufacturing industries sectors Portrait of oil and gas and mining in the province of East showed in Table 6. Java. Transparency of Extractive Resources Foundation There are 11 sub-sector from manufacturing industries that Policy Brief available at categorized as leading sub-sector. There are food and https://pwypindonesia.org/id/potret-migas-dan- beverages (1.42), tobacco (4.19), leather and footwear (1.38), pertambangan-di-provinsi-jawa-timur/ wood (2.61), paper (1.93), chemical (1.40), rubber and plastics 8. Dunn E.S. (1960). A statistical and analytical technique (1.86), other non metallic metal (1.82), basic metal (1.64), for regional analysis. Papers and Proceedings of the furniture (3.41), other manufacture (1.76). The highest export Regional Science Association 6, 98-112 commodities is jewelry (HS 71) with export value 2 989.99 9. Glasson, J. (1977). Regional Planing. United Kingdom: million dollar. Jewelry commodities comes from other Hutchinson and Co. Ltd.Grossmann H, Otto A, Stiller S, manufacturing industries sub-sector with 1.76 LQ value. Wood Wedermeir J, Koller C, Pfluger W, Rostel AA. (2006). (HS 44) is the scond highest commodities frm manufacturing Strategy 2030-Maritime trade and transport logistic. industries with export value in 2018, followed by animal fats Germany: Berenberg Bank. (HS 15), and copper (HS 74). The rest of main export 10. Grossmann H, Otto A, Stiller S, Wedermeir J, Koller C, commodities from secondary leading sector explained in Table Pfluger W, Rostel AA. (2006). Strategy 2030-Maritime 6. trade and transport logistic. Germany: Berenberg Bank. 11. Hoppes, R. B. (1991). Regional versus industrial shift- CONCLUSION share analysis-with help from the Lotus spreadsheet. Economic growth in East Java is classified as high economic Econ Devel Q 5(3), 258-267. growth in the national economy. As the third largest 12. Khusaini, M. (2015). A shift share analysis on regional contributor in the national economy, appropriate policies are competitiveness – a case of Banyuwangi district, East needed to maintain sustainability. One of them is utilizing the Java, Indonesia. Procedia Soc & Behavioral Sci. 211, 738- port as a port output multiplier (sea transportation). Port 744. activities are closely related to the export and import of a 13. Kusumastanto T. 2003. Ocean Policy in Building product. By increasing export activities, the East Java trade Maritime State in the Era of Regional Autonomy. balance that has a deficit can be overcome. Export activities Jakarta(ID): Gramedia Pustaka Utama can be increased by developing commodities from leading 14. Lubis E. (2012). Fishing Harbor. Indonesia: IPB Press. sectors in the province of East Java. Therefore, a policy is 15. Mandasari, Kusumastanto, T., Mulyati, H. (2017). needed to encourage leading sectors that have Economic policy analysis for port development in competitiveness in East Java province to continue to grow. Province of Aceh. Jurnal Ekonomi Pembangunan 18(1), Based on LQ, leading sector from primary sectors are food 92-108 crops, livestock, fisheries and crude petroleum, natural gas, 16. Muslim H.H.M, Jamhari, Darwanto DH. (2017). and geothermal. There are 11 leading subs-sectors from Agriculture category advantages and economic manufacturing industries. This research has utilize leading structure in the region of west nusa tenggara province. sectors and commodities that can be develop in East Java to Agro Ekonomi. 28, 64-79 support port throughput. 17. Nikijuluw, J,B. (2013). Analysis of leading economic sector of the district / city in Maluku province. Cita Policy support for east java economy can be made by Ekonom. 7(2), 236-244 considering the result of Shift Share Analysis. sector or sub- 18. Park, J. S., & Seo, Y. J. (2016). The impact of seaports on sector that has a NEij positive value means growth above the the regional economies in South Korea: Panel evidence national growth average. the IMij component results from from the augmented Solow model. Transportation differences in final demand, availability of raw materials, and Research Part E: Logistics and Transportation Review. industrial policies (eg marketing, institutional, taxation, 85, 107119. DOI: https: // doi.org /10.1016 subsidies, price support, etc.). therefore the government needs /j.tre.2015.11.009. to burden and strengthen the agribusiness system. In order to 19. Richardson J.A, Heidelberg RL. (2012). The Economic develop intermodal logistics and transportation impact of the ports of louisiana. [Report]. Retrieved Mei infrastructure, it is necessary to consider the centers of 23, 2019, from: http://portsoflouisiana.org/wp- economic growth in East Java Province so that they can achieve content/ uploads /2012-final-report.pdf. logistical efficiency. CEij shows the competitiveness of the sector and sub-sector, the sector that is negative indicates that

Journal of critical reviews 322