Analysis of the Competitive Leading Sector in Agricultural Sub

Sectors and the Effect on GRDP in Serdang Bedagai Regency

Pratama Hartadi

, Muhammad Yusuf

and Muhammad Fitri Rahmadana

Department of Economy, Postgraduate Faculty, State University of Medan

Keywords: Economic Growth, Location Quotient (LQ), Agriculture Sector, Gross Regional Domestic Product (GRDP)

Abstract: The Agriculture, Forestry and Fisheries sector is the largest contribution sector to GRDP in Serdang

Bedagai Regency with 39.14 percent average contribution in 2011-2016 (year of conservation). The aims of

this research : (1) to determine the leading sub-sectors in the agriculture, forestry and fisheries sector in

Serdang Bedagai Regency, (2) to determine the leading of agricultural sub sector effect on GRDP in

Serdang Bedagai Regency. The data in this study were obtained from The Central Bureau of Statistics

(BPS) of North Sumatera Province and Serdang Bedagai Regency. This research used a type of descriptive

research with a quantitative approach. The analysis used in this research are descriptive analysis, location

quotient (LQ), and simple linear regression. The results of this research that the agriculture, livestock and

fisheries sector is the leading sector base in Serdang Bedagai Regency. Agriculture, livestock and service;

and the fisheries sub sector is a leading sub sector of the agriculture, livestock and fisheries sector in

Serdang Bedagai Regency. The fisheries sub sector is the most leading agricultural sub sector in Serdang

Bedagai Regency. Furthermore, the LQ variable in the agriculture, livestock and fisheries sub sector has a

positive and significant influence on economic growth in Serdang Bedagai Regency.

1 INTRODUCTION

Indonesia is a developing country with the

agricultural sector as a source of livelihood for the

majority of its population. Most of the land use in

the Indonesian territory is used as agricultural land

and almost 50 percent of the total workforce still

depends on their life necessities in the agricultural

sector. This situation requires government policies in

the agricultural sector to be adjusted to the

conditions and developments that occur in the field

in overcoming various problems related to the

welfare of the nation, Tambunan in Yamin (2005).

The agricultural sector has an important role in

Indonesian economy, because the agricultural sector

serves as the basis or foundation of economic

development. The agricultural sector is one of the

leading sectors in the economy and has a role as a

buffer for national development, so the government

programs in agricultural development are directed at

increasing income and living standards such as

expanding employment, business opportunities and

markets for various products produced. Furthermore,

with the existence of more advanced and efficient

agricultural development, it is expected to be able to

increase the diversity of yields, improve the quality

and degree of production processing can support

regional development.

The agricultural sector as one of the economic

sectors is a very potential sector in contributing to

the growth and the national economy development,

both in terms of income and employment. The

agricultural sector has an increasingly important role

in the formation of PDRB, including in Serdang

Bedagai Regency. Serdang Bedagai Regency has

high potential agricultural land, especially for the

development of lowland rice crops. Agricultural

development in Serdang Bedagai Regency has an

important and strategic role in national and regional

development. The role of the agricultural sector is

not only for food security, but also contribute to

employment opportunities significantly, sources of

income and the regional economy.

Serdang Bedagai Regency is one of the regencies

in North Sumatra province based on the Law of the

Republic of Indonesia Number 36 of 2003

concerning the establishment of Samosir Regency

524

Hartadi, P., Yusuf, M. and Rahmadana, M.

Analysis of the Competitive Leading Sector in Agricultural Sub Sectors and the Effect on GRDP in Serdang Bedagai Regency.

DOI: 10.5220/0009504705240531

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 524-531

ISBN: 978-989-758-432-9

and Serdang Bedagai District in North Sumatra

Province, the result from the division of Deli

Serdang Regency. Below is a table of North Sumatra

Gross Regional Domestic Product (GRDP) and

Serdang Bedagai Regency on the basis of 2010

Constant Prices from 2012-2015.

Table 1: North Sumatra Gross Regional Domestic Product (GRDP) and Serdang Bedagai Regency on the basis

of Constant Prices in 2010 (Billion Rupiah), 2011-2016

Year North Sumatera Percent Serdang Bedagai Percent

2011 353,147.6 - 12,780.10 -

2012 375,924.1 6.45 13,558.80 6.09

2013 398,727.1 6.07 14,345.76 5.80

2014 419,573.3 5.23 15,080.38 5.12

2015 440,955.9 5.10 15,841.95 5.05

2016 463,775.5 5.18 16,656.17 5.14

Source : BPS of North Sumatera Province

Provincial and Serdang Bedagai GRDP data have

a positive trend from year to year. According to the

business field, GRDP of Serdang Bedagai Regency

is divided into 17 categories and most of the

categories are divided into subcategories. The

division into subcategories is adjusted to the

Indonesian Standard Business Classification (KLBI)

in 2009. The business field structure of some

communities Serdang Bedagai Regency can be seen

from the magnitude of the role of each business field

in the formation of Serdang Bedagai Regency GRDP

in 2014 produced by the Agriculture, Forestry and

Fisheries business, Processing Industry, Large Trade

and Retail, Car and Motorcycle Repair,

Construction, Business Field of Government

Administration , Defense and Compulsory Social

Security, provision of Accommodation and Drinking

Food, Real Estate and Educational Services. While

the role of Other Business Fields is below one

percent respectively

Table 2: Role of GRDP by Industry (percent), 2010─2014

Business field

2010 2011 2012 2013* 2014**

A Agriculture, Forestry and Fisheries

44,08 43,64 43,23 43,1 41,42

B Mining and Excavation

0,82 0,87 0,89 0,92 0,9

C Management Industry

19,78 19,91 19,66 19 19,47

D Procurement of Electricity and Gas

0,11 0,1 0,09 0,09 0,07

Water Supply, Waste, Waste and

Rec

clin

Mana

emen

0,01 0,01 0,01 0,01 0,01

F Construction

8,13 8,36 9,01 9,33 9,62

Large and Retail Trade; Car and

Motorc

cle Reparation 13,95 13,96 13,81 13,84 14,38

H Transportation and Warehousing

0,81 0,81 0,81 0,9 0,94

Supply of Accommodation, Food and

Drinks 3 2,9 2,93 2,91 2,99

J Information and Communication

0,63 0,58 0,56 0,54 0,53

K Financial and Insurance Services

0,45 0,47 0,49 0,51 0,52

L Real Estate

2,26 2,38 2,3 2,54 2,62

M,N Company Services

0,46 0,46 0,48 0,5 0,52

Pem Administration, Land, Mandatory

Social Securit

2,9 2,96 3,07 3,12 3,24

Analysis of the Competitive Leading Sector in Agricultural Sub Sectors and the Effect on GRDP in Serdang Bedagai Regency

525

P Educational Services

1,41 1,37 1,36 1,36 1,39

Q Health Services and Social Activities

0,78 0,79 0,82 0,83 0,86

R,S,T,U Other services

0,42 0,44 0,45 0,49 0,51

Gross Regional Domestic Product 100 100 100 100 100

Source : BPS of North Sumatera Province

Description: *) Temporary Figures **) Very Temporary Figures

To develop the potential for economic growth

which seen from the development of PDRB,

economic development is needed which refers to the

leading sector, besides having an impact on

accelerating economic growth, it will also affect

fundamental changes in the structure of the regional

economy. The benefits of knowing the leading

sector is able to provide an indication for nationally

and regionally economy. The leading sector is

guaranteed to have greater potential to grow faster

than other sectors in a region.

Table 3: Contribution of Agriculture, Forestry and Fisheries Categories to GRDP in Serdang Bedagai Regency

(Percent), 2010-2014

Business field 2010 2011 2012 2013* 2014**

1 2 3 4 5 6

Agriculture, Livestock, Hunting and Agricultural

Services

38,21 37,81 37,37 37,1 35,22

Forestry and Logging 0,25 0,24 0,23 0,22 22

Fisheries 5,62 5,58 5,62 5,78 5,99

Agriculture, Forestry, and Fisheries 44,08 43,64 43,23 43,1 41,42

Source : BPS of North Sumatera Province

Description: *) Temporary Figures **) Very Temporary Figures

In 2014 the categories of Agriculture, Forestry

and Fisheries contributed to the GRDP on the

current prices basis of 41.42 percent. The role of

business sector decreased from 44.08 percent in

2010 to 43.64 percent in 2011, 43.23 percent in 2012

and 43.10 in 2013

Table 4:Series 2010 GRDP on the basis of Constant Prices according to the Business Field in Serdang Bedagai

Regency (Billion Rupiah)

Sector 2011 2012 2013 2014 2015* 2016**

Agriculture, Forestry, and

Fisheries

5052.94 5311.48 5627.86 5910.10 6189.10 6439.70

Agriculture, Livestock and

Services

4372.17 4603.86 4893.99 5145.21 5384.70 5592.13

2 Forestry and Logging 30.73 30.71 30.87 31.07 31.32 31.57

3 Fisheries 650.04 676.91 702.99 733.81 773.09 815.99

Total 12,780.10 13,558.80 14,345.76 15,080.38 15,841.95 16,656.17

Source : BPS of North Sumatera Province

Description: 2015* Temporary Figures 2016** Very Temporary Figures

According to North in Sjafrizal (2008) states that

"Economic growth of a region is basically

determined by the amount of competitive advantage

possessed by the region concerned". If a certain area

can encourage the growth of economic sectors that

have competitive advantages as a basis for export

activities, then the economic growth of the region

will increase rapidly. This is the basis for Serdang

Bedagai Regency in increasing regional economic

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

526

growth so it can grow export activities and compete

with other regions.

2 THEORICAL FRAMEWORK

AND HYPOTHESIS

DEVELOPMENT

Economic development is an effort to increase per

capita income and increase productivity per capita

by adding capital equipment and adding skills or

efforts to add capital equipment and add skills so

that each other brings greater per capita income and

higher per capita productivity (According to

Djojohadikusumo in Martono, 2000)

According to Todaro in Sirojuzilam (2008),

economic development is a multidimensional

process, which involves major changes, both to

changes in economic structure, social change,

reducing or eliminating poverty, reducing inequality

and unemployment in the context of economic

growth.

Economic development shows the changes in

output structure and input allocation to various

sectors of the economy in addition to increasing

output. Generally development always accompanied

by growth, but growth does not necessarily

accompanied by development (Irawan and

Suparmoko, 1992).

Basically, the theory of regional economic

development discuss two things: 1) methods in

analyzing the development of an area and 2) theory

relating to the factors that determine the economic

growth of a region. Arsyad in a journal written by

Suwandi (2016) states that “Formulates the study of

regional development as follows : regional

development equal to natural resources, labor,

investment, entrepreneurship, communication,

industry composition, technology, area, export

markets, the international economic situation, the

capacity of local government, spending central

government and aid development) the development

that is undertaken should be able to explore all the

potential in each region to be processed so that will

be very useful in real terms”.

There are two main concepts in regional

economic development, namely balance

(equilibrium) and regional production factor

mobility. It means the economic system will reach

its natural development point if capital can flow

without restrictions. Therefore, capital will flow

from high wage regions to low wage regions. The

economic growth rate of a region is determined by

the amount of exports both selling products /

services outside the region to other regions within

the country and abroad. Basically all activities both

product producers and service providers that bring

money from outside the region because their

activities are basic activities. Employment and

income in the base sector are functions of exogenous

requests (not dependent on internal strength / local

demand) (Tarigan, 2002).

Regional economic growth analyzes an area as

an open economic system that deals with other

regions through the flow of production factors and

commodity exchange. Economic growth can be

valued as a result of government policies, especially

in economics. Economic growth is the growth rate

formed from various economic sectors indirectly

describing the growth rate that occurs and as an

important indicator for regions to evaluate the

success of development (Sirojuzilam, 2008).

According to Adam Smith, economic growth is

divided into 5 stages start from the hunting period,

raising livestock, planting time, trading period and

industrial period. According to this theory, society

will move from traditional society to modern

society.

According to the theory of comparative

advantage, David Ricardo states that a country must

focus its economic activities on industries that are

superior and most internationally competitive, and

conduct trade activities with other countries to

obtain goods that are not produced nationally.

Gross Regional Domestic Product (PDRB)

according to the Central Bureau of Statistics (2013)

is an indicator to show the economic growth rate of

a region in a sector, so that it can be seen the causes

of economic growth in a region.

The role of the agricultural sector in economic

development is very important because some

members of society in poor countries depend their

lives on the sector. If the planners seriously pay

attention to the welfare of their people, then the only

way is by improving the welfare of most members of

their community living in the agricultural sector.

This method can be achieved by increasing the

production of food crops and their trading plants

and, or by increasing the prices they receive for the

products they produce (Arsyad, 1992).

According to (Todaro, 2003), traditionally the

role of agriculture in economic development is

considered passive and only as a support. Based on

the historical experience of western countries,

economic development seems to require a rapid

structural transformation of economy, which

originally prioritizes agricultural activities into more

complex societies where there are more modern

industrial and service fields. Thus, the main role of

agriculture is to provide sufficient labor and food at

low prices to develop dynamic industries as an

Analysis of the Competitive Leading Sector in Agricultural Sub Sectors and the Effect on GRDP in Serdang Bedagai Regency

527

important sector in all economic development

strategies.

In the future, development of Serdang Bedagai

Regency will be carried out by considering leading

sectors or bases which will be used as priority scale.

For this reason, it is necessary to conduct more

comprehensive study of potential sectors in Serdang

Bedagai Regency that have advantages both in terms

of agriculture and its contribution to the aggregate

economic growth in Serdang Bedagai Regency.

3 RESEARCH METHOD

This research was conduct in Serdang Bedagai

Regency which become one of regencies in North

Sumatera. This research is aimed to the leading

commodities in agricultural sector in Serdang

Bedagai Regency and the effect on economic growth

of Serdang Bedagai Regency. The data in this

reasearch were obtained from The Central Bureau

of Statistics (BPS) of North Sumatera Province and

Serdang Bedagai Regency.

Based on the results of calculation of Location

Quotient (LQ), it can be seen the activities

concentration in an area as follows:

1. If the value of LQ > 1, it means the growth rate

of sector I in the research area is greater with the

same growth rate sector in the economy of

reference area. Thus sector I is a leading sector in

the study area as well as an economic base sector

for further development.

2. If the value of LQ < 1, it means the growth rate

of sector I in the research area is smaller with the

same growth rate sector in the economy of

reference area. Thus sector I is not a leading

sector in the study area and is not an economic

base sector and is not prospective to be

developed further.

3. If the value of LQ = 1, it means the growth rate

of sector I in the research area is the same as

growth rate sector in the economy of reference

area.

Then from the LQ values obtained, it is analyzed

and can be seen whether the base commodities in

agricultural sub sector affect the growth of the

GRDP of Serdang Bedagai Regency.

4 RESULT AND DISCUSSION

The GRDP of North Sumatra Province Agriculture,

Forestry and Fisheries Sector 2011 to 2016

(observation year) is as follows:

Table 5: Series 2010 of GRDP Based on Constant Prices According to the Business Field of North Sumatra

Province (Billion Rupiah), from 2011 to 2016 (Observation Year)

Year

Agriculture,

Forestry,

and

Fisheries

Sector

Sub Sector :

Agriculture,

Livestock, and

Services

Sub Sector :

Forestry and

Logging

Sub Sector :

Fisheries

Total of

GRDP

Data % Data % Data %

2011 90592.55 - 79385.54 - 3531.06 - 7675.95 - 353147.6 -

2012 95405.42 5.31 83663.65 5.39 3663.51 3.75 8078.25 5.24 375924.1 6.45

2013 99894.57 4.71 87560.02 4.66 3823.99 4.38 8510.56 5.35 398727.1 6.07

2014 104262.8 4.37 91363.87 4.34 3926.11 2.67 8972.85 5.43 419573.3 5.23

2015 110066 5.57 96506.08 5.63 4078.86 3.89 9481.06 5.66 440955.9 5.10

2016 115179.7 4.65 101220.1 4.88 3934.32 -3.54 10025.28 5.74 463775.5 5.18

Source: BPS North Sumatra Data, 2018 (processed).

Based on the table above, it is known that all

sectors, sub sectors and GRDP in North Sumatra

Province had a positive trend by the increasing from

year to year. It shows the economic development of

the community, especially in agriculture, forestry

and fisheries sectors as a whole in North Sumatra

Province.

Serdang Bedagai Regency GRDP data on

Agriculture Sector from 2011 to 2016 (observation

year) is as follows:

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

528

Table 6: Series 2010 of GRDP on the basis of Constant Prices according to the Business Field of Serdang

Bedagai Regency (Billion Rupiah) from 2011 to 2016 (Observation Year)

Year

Agriculture,

Forestry,

and

Fisheries

Sector

Sub Sector :

Agriculture,

Livestock, and

Services

Sub Sector :

Forestry and

Logging

Sub Sector :

Fisheries

Total of

GRDP

Data % Data % Data %

2011 5052.94 - 4372.17 - 30.73 - 650.04 - 12,780.10 -

2012 5311.48 5.12 4603.86 5.30 30.71 -0.07 676.91 4.13 13,558.80 6.09

2013 5627.86 5.96 4893.99 6.30 30.87 0.52 702.99 3.85 14,345.76 5.80

2014 5910.1 5.02 5145.21 5.13 31.07 0.65 733.81 4.38 15,080.38 5.12

2015 6189.1 4.72 5384.7 4.65 31.32 0.80 773.09 5.35 15,841.95 5.05

2016 6439.7 4.05 5592.13 3.85 31.57 0.80 815.99 5.55 16,656.17 5.14

Source: BPS North Sumatra Data, 2018 (processed).

Based on the table above, it is known that all

sectors, sub sectors and GRDP in North Sumatra

Province also had a positive trend by the increasing

from year to year. It shows the economic

development of the community, especially in

agriculture, forestry and fisheries sectors as a whole

in North Sumatra Province. But the question is

whether the agricultural sector is a leading base

sector in Serdang Bedagai Regency which needs to

be analyzed by Location Quotient (LQ).

The results of LQ formulation in agriculture,

forestry and fisheries sectors and sub sectors of

Serdang Bedagai Regency are as follows

Table 7: Sector LQ and Agriculture, Forestry and Fisheries Sub Sector of Serdang Bedagai Regency, from

2011 to 2016 (Observation Year)

Year

Agriculture,

Forestry, and

Fisheries Sector

Sub Sector

Agriculture,

Livestock, and

Services

Forestry and

Logging

Fisheries

2011 1.717 1.704 0.242 2.531

2012 1.712 1.705 0.235 2.519

2013 1.712 1.709 0.228 2.525

2014 1.707 1.703 0.224 2.53

2015 1.712 1.709 0.217 2.53

2016 1.704 1.689 0.227 2.583

Source: Data processed, 2018

Based on the table above, it is explained that

agriculture, forestry and fisheries sector in Serdang

Bedagai Regency is a base sector or leading sector

with a consistent value of LQ > 1 from 2011 to

2017. It explains that agriculture, forestry and

fisheries sectors have a large contribution to the

economic growth in Serdang Bedagai Regency. The

increasing of LQ value in agricultural sector is

inseparable because the economy of Serdang

Bedagai Regency has extensive and fertile natural

resources and also the people can utilize the existing

natural wealth.

The agriculture, forestry and fisheries sectors

indicate that Serdang Bedagai Regency is able to

fulfill its own needs in the fields of agriculture,

forestry and fisheries. It is even possible to export

economic activity out of areas and able to produce

goods and services that can be sold outside the

region to increase the revenue in Serdang Regency

Begadai. This is inseparable from the topographical

conditions of the Serdang Regency Begadai with a

variety of land forms and capable of producing

various agricultural, forestry and fisheries

commodities.

Analysis of the Competitive Leading Sector in Agricultural Sub Sectors and the Effect on GRDP in Serdang Bedagai Regency

529

However, if examined in detail from the state of

LQ in agriculture, forestry and fisheries sector in

Serdang Bedagai Regency, the conclusions can be

made on the advantages as follow:

a. The agriculture, livestock and services

sub-sector has LQ > 1 which is consistent with the

observation year (2011 to 2016). It explains that the

agriculture, forestry and fisheries sector, the

agriculture, livestock and services sub sector is a

base or leading sub sector in Serdang Bedagai

Regency.

b. The agriculture, livestock and services

sub-sector has LQ < 1 which is consistent with the

observation year (2011 to 2016). It explains that the

agriculture, forestry and fisheries sector, the

agriculture, livestock and services sub sector is not a

base leading sub sector in Serdang Bedagai

Regency.

c. The fisheries sub-sector has LQ> 1 even

the LQ value> 2 which is consistent with the

observation year (2011 to 2016). It explains that the

agriculture, forestry and fisheries sector, the

agriculture, livestock and services sub sector is a

base or leading sub sector in Serdang Bedagai

Regency. It that the fisheries sub-sector is the most

superior in Serdang Bedagai Regency.

Furthermore, the results of LQ analysis of each

of subs ectors and associated with economic growth

in Serdang Bedagai Regency in a simple regression

analysis by the following result:

Table 8: The Results from Model Function Estimation fo Agriculture, Forestry and Fisheries Sub Sector

Against Economic Growth in Serdang Bedagai Regency

Free Variable Coefficient Sdr Error T-tes Prob. Description

C 1,645 0,288 5,721 0 Significant

Agricultural Sub

Secto

0,697 0,163 4,286 0,001 Signifikan

R Square 0,535

Adjusted R Square 0,505

Source: Data processed, 2018

Based on the table above, it is known that the

leading sub sectors of agriculture, forestry ancynd

fisheries have a positive and significant influence on

economic growth in Serdang Regency by using

formula below:

Log(PDRB) = 1,645 + 0,697 (Agricultural Sub

Sector) + e

The explanation based on above formula are as

follow:

a. Log (GRDP) = 1,645, means that if the LQ sub-

sector of agriculture, forestry and fisheries has 0

value, then the magnitude of economic growth

is 1,645.

b. Agricultural Sub-Sector = 0.697, means that if

the LQ in agriculture, forestry and fisheries sub-

sector increases by 1%, then economic growth

increases by 0.697 percent.

Furthermore, in the research model, the value of

R squared is 0.535. It shows that the agriculture,

forestry and fisheries sub sector variables are able to

explain the model of economic growth by 53.5

percent in Serdang Bedagai Regency. And the

remaining is 46.5 percent influenced by other

variables which not examined in this study.

In an effort to increase the level of economic

growth in Serdang Bedagai, the government through

the Regional Planning Agency can make efforts to

increase the LQ value of the Agriculture, Forestry

and Fisheries Sector. This is deemed necessary

because the increasing LQ value of the Agriculture,

Forestry and Fisheries Sector can increase the

economic growth of Serdang Bedagai Regency.

5 CONCLUSIONS

Based on the results and discussion of research can

be concluded as follows:

1. The agriculture, livestock and fisheries sector

is the leading sector basis in Serdang Bedagai

Regency.

2. Agriculture, livestock and service; and the

fisheries sub sector is a leading sub sector of

the agriculture, livestock and fisheries sector in

Serdang Bedagai Regency.

LQ variable in the agriculture, livestock and

fisheries sub sector has a positive and significant

influence on economic growth in Serdang Bedagai

Regency.

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530

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