Industrialization in South Sumatera

Abstract

— This study uses the Kaldor’s Growth Law model to estimate the effect of the manufacturing industry sector on the South Sumatra economy. The research objective is to find out whether the industrial sector can be an engine of growth at the full employment level. The results showed that the industrial sector can take a share of 34 percent of economic growth. However, if the input factor is also allocated to the agriculture and mining sectors, the role of industry actually decreases to 14.6 percent. The role of manufacturing does not specifically accelerate the pace of economic growth in South Sumatra. This can be seen from the small and insignificant influence of the difference between the growth of manufacturing with agriculture and mining on the economic growth of South Sumatra. This means that the growth of the manufacturing sector is relatively not greater than the growth of the non-manufacturing sector or even a negative difference, which means faster growth of other sectors. The role of the industrial sector in creating employment is in line with the share of the creation of added value in the industrial sector which is also not yet encouraging in terms of the process of structural transformation. The role of the industrial sector in creating employment opportunities can be said to be insignificant.