Global Competitiveness of Trade in the West Coast of Sumatra from the Perspective of the Agglomeration of Economic Approach

Abstract

The main aim of this study is to analysed the pattern of agglomeration of trade flows in the city of Padang and Teluk Bayur Port with the regencies and cities along the west coast of Sumatra, as well as the factors that influence them. How competitive is trade flow with the West coast region compared to the East coast of Sumatra. The analytical approach used is spatial econometrics, especially the spatial lag model and spatial error model. The data used is the volume of loading and unloading of inter-island and foreign ships at Teluk Bayur Port and other districts and cities in 133 areas on the West Coast and 155 districts and cities in the economic corridors of Sumatra. The results showed that the West Coast trade flow variable had no significant effect on the existence of Padang City as the centre of economic agglomeration in the economic corridor area of Sumatra. Our findings are that trade flows in the city of Padang have not been able to encourage economic agglomeration in regencies and cities on the West Coast of Sumatra, on the contrary there are connections with regencies and cities in the economic corridors of the East Coast of Sumatra. Therefore, to accelerate the process of economic agglomeration through trade flows, joint policies are needed with the agricultural sector in the Sumatran economic corridor in facing global market competition, as well as strengthening inter-regional internal markets in the Sumatra corridor, agricultural commodity transactions between regencies and cities in the Sumatran economic corridor which must be strengthened, so as to be able to compete in a competitive global market.