Analysis of the Determination of Leading Sector of the

Regional Economy: Case Study - Underdeveloped

Regions in the Northern Part of Aceh

Nurlina, Puti Andiny, and Ziaul Maula

Faculty of Economics Samudra University, Meurandeh, Langsa, Aceh, Indonesia

Abstract. The purpose of this study is to analyze the development strategy of

underdeveloped areas based on leading sectors in the Northern Aceh Region.

The analytical method used is Klassen Typology, LQ, Shift Share, and SWOT

analysis. Based on the results of the Klassen typology analysis using data from

2010-2017, it was found that the Regencies that are categorized as

underdeveloped areas in the Northern part of Aceh Region are North Aceh

District and Bireuen District. Based on the results of the SWOT analysis, the

priority of the strategy in developing leading sectors for the development of

underdeveloped areas in North Aceh District is the development of featured

products in rural areas. Meanwhile, in Bireuen District the priority of the

strategy in developing leading sectors for the development of underdeveloped

areas is the development of agribusiness and agro-industry based agriculture.

Keywords. Underdeveloped regions ꞏ Leading sector ꞏ SWOT

1 Introduction

Underdeveloped area is an area with a district whose community and territory are

relatively less developed compared to other regions on a national scale. The

backwardness of the area can be measured based on six main criteria, namely

economy, human resources, infrastructure, regional financial capacity, accessibility

and regional characteristics. Therefore, a planned and systematic regional

development effort is needed so that the underdeveloped areas are ultimately on par

with other regions in Indonesia that have developed first.

Efforts to achieve prosperity is a form of implementation of equitable

development, especially in underdeveloped areas. Therefore, it is necessary to

develop an underdeveloped regional development strategy as a real step that is

integrated and directed at regions with social, cultural, financial economic conditions

of the region, accessibility, and the availability of infrastructure that is still lagging

behind. These conditions are generally found in areas that are geographically isolated

and remote or far from the reach of facilities of the District Capital. On the other

hand, special attention is needed to regions that have the economic potential to

progress, but are left behind as a result of their limited ability to exploit potential, or

due to social and political conflicts. In relation to the acceleration of development, it

is necessary to have a common perception and vision between the various elements of

Nurlina, ., Andiny, P. and Maula, Z.

Analysis of the Determination of Leading Sector of the Regional Economy: Case Study - Underdeveloped Regions in the Northern Part of Aceh).

DOI: 10.5220/0009837200002900

In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 113-119

ISBN: 978-989-758-582-1; ISSN: 2655-9064

113

stakeholders in the regions with the central government in this case the Ministry of

Underdeveloped Regions which has the function of facilities, coordination,

synchronization of acceleration data for the development of underdeveloped regions.

The acceleration of development in underdeveloped areas is the implementation of

the third Nawa Cita agenda, namely developing Indonesia from the suburbs by

strengthening regions and villages within the framework of a unitary state. In the

2015-2019 RPJMN (National Medium-Term Development Plan), the targets to be

achieved in the development of underdeveloped areas are an increase in average

economic growth, a decrease in the average percentage of the poor, an increase in the

human development index and a decrease in the number of underdeveloped areas

becoming developed districts.

Table 1 explains the general condition of rural areas which are underdeveloped

villages based on the Big Island Region in Indonesia.

Table 1. Number of Underdeveloped Villages based on Big Island Region in 2014.

No. Island Region

Number of

Villages

Number of Very

Underdeveloped

Villa

1. Sumatera 22.056 8.241 37,36%

2. Jawa 22.458 806 3,59%

3. Kalimantan 6.382 1.702 26,67%

4. Sulawesi 8.233 1.213 14,73%

5. Nusa Tenggara & Bali 3.599 424 11,78%

6. Maluku 1.958 833 42,54%

7. Papua 5.204 4.049 77,81%

Total of District /City

(514 Kab/Kota)

74.045 17.268 23,32%

Source: 1) PUM Director General of Ministry of Home Affairs, December 2014

2) PODES data, 2011 (processed), Village Ministry, PDT, 2014

Based on data from the Ministry of villages, Development of Underdeveloped

areas and Transmigration of the Republic of Indonesia that there are still

underdeveloped areas in Indonesia. There are 17,268 villages throughout Indonesia

that are designated as underdeveloped villages which will then be made as a priority

target. Table I.1 shows that the island which has the most number of underdeveloped

villages is in Papua Island, which is 77.81 percent of the number of villages that are

very underdeveloped, followed by Maluku island at 42.54 percent, Sumatra at 37

percent, Kalimantan at 26.67 pesen, Sulawesi by 14.73 percent, and Nusa Tenggara

and Bali which is 11.78 percent (web.kominfo.go.id).

As for the Province of Aceh, there are 2,244 villages that are categorized as

underdeveloped and developing villages spread across 23 Regencies / Cities in Aceh

Province (dialeksis.com).

The contributing factor to the large number of underdeveloped villages in Aceh

Province is that there are still many people living in remote areas with all the

limitations on all the access to the resources and facilities they need. In fact, some of

them have not been completely reached by government bureaucratic services, such as

population data so that they do not get health services through free health insurance

MIICEMA 2019 - Malaysia Indonesia International Conference on Economics Management and Accounting

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from the government. Then inadequate facilities and infrastructure such as electricity,

education facilities, transportation access, and road infrastructure. The deterioration

was increasingly felt after the earthquake and Tsunami which hit Aceh and prolonged

conflict so that it cannot be touched by government development programs, both

central, provincial and district.

Seeing these conditions, it is necessary to make efforts to create synergy of

various elements in encouraging accelerated development in Aceh Province. Not only

that, it needs to be done in-depth studies related to the potential that can be developed

for community empowerment, such as agriculture and other potentials, so that

breakthrough programs can be formulated to build in an integrated and participatory

manner.

The objectives to be achieved in this study are:

1. Analyzing areas categorized as undeveloped areas in the North-East Region of

Aceh.

2. Analyzing sectors that have potential as a base sector and have competitive

advantage or competitiveness.

3. Analyzing development strategies for underdeveloped areas based on leading

sectors.

2 Research Method

The location in this study was underdeveloped areas in Northern Part of Aceh. The

type of data used was secondary data from the Central Bureau of Statistics (BPS) and

other sources from the internet, journals and literature studies.

Data analysis methods in this study used Klassen typology analysis, location

quotient analysis (LQ), shift share analysis, growth ratio model (MRP) analysis,

overlay analysis, and SWOT analysis.

3 Result and Discussion

3.1 Underdeveloped Regions

Identification of underdeveloped areas using the Klassen Typology method, namely

the division of regions in 4 Quadrants. Quadrant I (developed regions) is a region with

a PDRB (Gross Regional Domestic Product) per capita and economic growth is above

average. Quadrant II (developed but depressed regions) is an area with a PDRB (Gross

Regional Domestic Product) per capita is above average and economic growth IS

below average. Quadrant III (fast developing regions) is a region with below average

of PDRB (Gross Regional Domestic Product) per capita and economic growth is above

average. Quadrant IV (Underdeveloped Area) is a region with a GDRP (Gross

Regional Domestic Product) Per Capita and economic growth is below average.

Based on the results of data analysis using the Klassen Typology method,

regencies included in the relatively underdeveloped /underdeveloped region in the

Northern Part of Aceh Region are Bireuen District and North Aceh District

Analysis of the Determination of Leading Sector of the Regional Economy: Case Study - Underdeveloped Regions in the Northern Part of

Aceh)

115

3.2 Regional Potential Analysis

3.2.1 Location Quotient (LQ)

LQ analysis is used to find out the level of specialization of the base or leading sector.

This analysis method is also used to measure the concentration of an activity

(industry) in an area with the role of similar activities or industries in the regional or

national economy. The basis calculation uses the PDRB (Gross Regional Domestic

Product) variable on an activity in the regional economic structure. If a sector that has

a LQ value of more than 1, it indicates that the role of the economic sector is quite

prominent in the area and the sector is able to export a portion of the added value it

generates. Conversely, if a sector that has an LQ value of less than 1, it is only able to

meet the domestic or local market area and tends to import from other regions.

Based on the results of the LQ analysis, it shows that there were 4 (four) base

sectors in Bireuen District in 2010-2017, the 4 (four) sectors were (1) the agriculture,

forestry and fisheries sectors (1,091), (2) the water supply sector, waste management,

waste and recycling (1,166), (3) wholesale and retail trade sector, car and motorcycle

repair (1,482), (4) transportation and warehousing sector (1,204).

Based on the results of the LQ analysis, there are 3 basic sectors in North Aceh

District in 2010-2017, these 3 sectors are (1) the agriculture, forestry and fisheries

sector (1,228), (2) the mining and quarrying sector (4,512), (3) the manufacturing

industry sector (2,696). These three sectors are sectors that have advantages so that

they are able to meet the needs in North Aceh District and have the potential to be

exported out of North Aceh District.

3.2.2 Shift Share Analysis

Shift Share Analysis is used to analyse changes in various indicators of economic

activity, such as production at two time points in an area and to determine the

performance of the regional economy. From this analysis it is known that the

development of a sector in an area when compared relatively to other sectors, whether

its growth is fast or slow. This analysis is useful to see the development of the region

to a wider area for example the development of districts to provinces or provinces to

the national. With a shift share, it can be known the development of sectors compared

to other sectors and it can compare the economic rate in a region. In this analysis the

components of economic growth are divided into three, namely: Regional Share,

Proportionality Shift (Mixed Shift) and Differential Shift (Competitive Shift).

Based on the results of the Shift Share analysis of underdeveloped areas in the

Northern Part of Aceh in 2010-2017, it can be seen that the electricity and gas supply

sector; Water Supply, Waste Management, Waste and Recycling; and Wholesale and

Retail Trade; The Car and Motorcycle Reparation are the sectors that have

competitiveness in Bireuen District. Meanwhile, in North Aceh District it can be seen

that the electricity and gas procurement sector; Water Supply, Waste Management,

Waste and Recycling; Wholesale and retail trade; Car and Motorcycle Reparations;

Provision of Accommodation and Food and Drink; Real estate; Government

Administration, Defence and Social Security; Educational Services; Health Services

and Social Activities; and Other Services are the sectors that have competitiveness.

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3.3 SWOT Analysis

3.3.1 SWOT Analysis as a Formulation Tool for Bireuen District Development

Strategy

Based on the largest number of integrity, the order / ranking of priority strategies in

developing underdeveloped areas are (1) Development of agribusiness and

agroindustry based agriculture systems (2) Developing new growth centres in areas

that are not yet served by growth centres (3) Making the tourism development

masterplan connected with the province, sustainable (4) Improvement of agricultural

facilities and infrastructure (5) Zoning strategic areas (6) Diversification and

differentiation of product (7) Improved licensing process services (8) Strengthening

of instruments for preventing pollution and/or environmental damage (9) Vocational

training to improve the quality of human resources (10) Improved management of a

strong defence and security system.

3.3.2 SWOT Analysis as a Formulation Tool for North Aceh District

Development Strategy

Based on the largest number of integrity, the order / ranking of priority strategies in

developing underdeveloped areas are (1) Development of leading products in rural

areas (2) Infrastructure development (3) Tourism development (4) Socializing and

promoting the potential of the area to outside parties (investors) (5) Diversification

and differentiation of product (6) Strengthening of instruments for preventing

pollution and / or environmental damage (7) Restructure and redistribute ownership of

productive assets to rural communities (8) Improved licensing process services (9)

Developing the competitiveness of cooperatives and MSMEs (10) Vocational training

to improve the quality of human resources (11) Improved management of a strong

defense and security system.

4 Conclusion

1. Districts/ Cities categorized as underdeveloped areas in the North-East Part of

Aceh Region are Bireuen District, North Aceh District, East Aceh District, and

Aceh Tamiang District.

2. Sectors that have potential as a base sector based on LQ analysis are:

a. The basic sectors in Bireuen District is wholesale and retail trade, car and

motorcycle repair.

b. The basic sectors in North Aceh District is the mining and quarrying sector.

Whereas sectors that have comparative advantages or competitiveness based on

Shift Share analysis are:

a. In Bireuen District are (1) electricity and gas procurement (2) water supply,

waste management, waste and recycling (3) wholesale and retail trade, car and

motorcycle repair.

Analysis of the Determination of Leading Sector of the Regional Economy: Case Study - Underdeveloped Regions in the Northern Part of

Aceh)

117

b. In North Aceh District are (1) electricity and gas procurement (2) water

supply, waste management, waste and recycling (3) construction (4) wholesale

and retail trade, car and motorcycle repair (5) accommodation and food and

beverage providers (6) real estate (7) Government Administration, Defence

and Social Security (8) Educational Services Health Services and Social

Activities (9) Other Services.

3. Based on the results of the SWOT analysis, the leading sector development

strategies for regional development are:

a. The strategic priority in developing underdeveloped areas in Bireuen District is

the development of agribusiness and agro-industry based agriculture systems.

b. The strategic priority in developing disadvantaged areas in North Aceh District

is the development of leading products in rural areas.

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