IDENTIFICATION OF ECONOMIC DEVELOPMENT BY
DETERMINING THE SUPERIOR LOCAL PRODUCTS
The local economy is a basis for national economic development, the adequate local economic structure will firmly support the rate of national economy. In accelerating the role of local economy, the government stimulates by implementing the 1999 Law No.22 on the Principal of Local Government and 1999 Law No. 25 on the Balance of Central and Local Finances.
Hall Hill in the 1996 Indonesian Human Development Report said that the regional development in Indonesia became crucial for some reasons, first Political reason, with the highly plural ethnics there were no more sensitive issue in Indonesia but regionalism. Second, the disparity of regional income from the distribution of natural resources income that was highly uneven distribution. It was undoubtedly that the disappointment of the regions that were rich of natural resources like Aceh and Irian Jaya was greater. Third, the regions played an important role on government policy regarding the spatial dynamics such as the distribution of inhabitant, for example. With regard to that spatial dynamics, the fourth reason emerged, that was how the relation between central and local government was managed? How much should the decentralization be given to region so that it would be still consistent in order to maintain the national unity and integrity?
The four reasons above, indeed were important for attention of the decision maker in regional level remembering it just affected on the integration of the nation, especially if we saw some numbers indicated the discrepancy among regions, such as in 1993 when Java dominated national GDP of 59% while Sumatra was only 23%. Meanwhile the sectors of modern and infrastructural industries were highly concentrated on 3 metropolitan industrial areas in java.
How far the local development grew could be seen on the number of economic development achievement of a region in the following table. We could see the increase of economic growth per capita in several provinces in Indonesia before the economic crisis.
The PDRB Per Capita based on the Constant basic Price 1990 – 1997 (pct)
To spur the economic growth per capita, it needed strategic steps through the development of economic sector properly, as we all knew that Indonesia was agrarian country so that the agrarian sector was a main pillar for the national economic development, however as with the existing transformational process, then such sector slowly was shifted on industrial sector as seen in the following table:
The Comparison of Agricultural and Industrial Sector Proportion on PRDB in 26 provinces in Indonesia in 1991 – 1993.
The above Table showed the way of transformational pattern in which Java area experienced a rapid industrialization, while other regions still depended on the primary sector. If we followed the development of this 2 sectors, then it was interesting if we traced the true analysis about what sector became strategic for each province so that we could make a decision in increasing regional economy of each province.
Remembering that in regional economic analysis, it needed to see the local potential in detail in order to get information for the introduction of local economy to be more deeply analyzed, then we needed a glance on how the economic condition of some provinces in Indonesia.
The local-based economy not only showed a new rhetoric but also a fundamental shifting on the doer as the activity regarding the economic development. As we knew the local development was a motor of local government itself assisted by local entrepreneur through interaction with existing local resources, it would create a new force as Driving Forces for local economy. The regional development emphasized the endogenous development policy by endeavoring local resources, local institution and physical resources. The objectives that would be reaching in local development are:
1. To develop the job quality for the existing inhabitant
2. To reach local economic stability
3. To develop the labor basis in the diversity of economic resources.
The Strategic Element of Local Development
Prerequisite for the Success of Formulation of Local Development Strategy
The most essential initial step in designing the proper development strategy was socio-economic analysis and development analysis of the existing capacity, so that a region could be easily identify the opportunity, challenge and the available resources. As with this thing, it also needed a clear question on the objective of local development involving sectors and sub-sectors that became the basic for the related region. Some kinds of things that needed a consideration in determining the local development strategy are:
1. To determine sector/sub-sector that had dominant role for local economy.
2. To identify the important relation between domestic and foreign local/regional economy.
3. To interpret the local potential for economic development, stability or its decline.
4. To identify the important possibility for local inhabitant and government official for the developer of local economy.
Conceptual Basis
By the identified sector, sub-sector and product that could be made as a generating motor of local development, it was expected that the local development strategy would be more focused on those superior sector, sub-sector and products that became a specialization of that region. On the other side, investment from outside region could also be increased to develop such identified superior products so that it was expected that it would also spur the local economic development through the creation of new job which also meant that the number of pervaded labor forces so that soon it increased and would create a spurred public capacity of buying and also related sectors (induced investment).
THE STRATEGIC ELEMENTS OF LOCAL DEVELOPMENT
Characteristics of Achievement
- The origin of the Company: Local Company, National Company, International Company.
- Development Sector: Manufacture, Services, Government.
- Scale: Small-scale, medium-scale, large-scale.
- The Form of the Company: New, Exporting, Branch
- Critical Limit: Environmental Pollution, Wage level.
The Method of Development:
Direct assistance to the company.
- Supplier, seller or guarantee exemption
- Labor forces mobilization
- Assistance provider: fund, debt, grant
Assistance of development process: licensing, marketing technique information
The local Organization Form:
- Local government: local government institution in city or regency.
- Local development Company: profitable and non-profitable.
- International Voluntary Organization.
Time Scale:
- Short-scale: 3 – 6 months
- Mid – long scale: 3 – 5 years
Hall Hill in the 1996 Indonesian Human Development Report said that the regional development in Indonesia became crucial for some reasons, first Political reason, with the highly plural ethnics there were no more sensitive issue in Indonesia but regionalism. Second, the disparity of regional income from the distribution of natural resources income that was highly uneven distribution. It was undoubtedly that the disappointment of the regions that were rich of natural resources like Aceh and Irian Jaya was greater. Third, the regions played an important role on government policy regarding the spatial dynamics such as the distribution of inhabitant, for example. With regard to that spatial dynamics, the fourth reason emerged, that was how the relation between central and local government was managed? How much should the decentralization be given to region so that it would be still consistent in order to maintain the national unity and integrity?
The four reasons above, indeed were important for attention of the decision maker in regional level remembering it just affected on the integration of the nation, especially if we saw some numbers indicated the discrepancy among regions, such as in 1993 when Java dominated national GDP of 59% while Sumatra was only 23%. Meanwhile the sectors of modern and infrastructural industries were highly concentrated on 3 metropolitan industrial areas in java.
How far the local development grew could be seen on the number of economic development achievement of a region in the following table. We could see the increase of economic growth per capita in several provinces in Indonesia before the economic crisis.
The PDRB Per Capita based on the Constant basic Price 1990 – 1997 (pct)
To spur the economic growth per capita, it needed strategic steps through the development of economic sector properly, as we all knew that Indonesia was agrarian country so that the agrarian sector was a main pillar for the national economic development, however as with the existing transformational process, then such sector slowly was shifted on industrial sector as seen in the following table:
The Comparison of Agricultural and Industrial Sector Proportion on PRDB in 26 provinces in Indonesia in 1991 – 1993.
The above Table showed the way of transformational pattern in which Java area experienced a rapid industrialization, while other regions still depended on the primary sector. If we followed the development of this 2 sectors, then it was interesting if we traced the true analysis about what sector became strategic for each province so that we could make a decision in increasing regional economy of each province.
Remembering that in regional economic analysis, it needed to see the local potential in detail in order to get information for the introduction of local economy to be more deeply analyzed, then we needed a glance on how the economic condition of some provinces in Indonesia.
The local-based economy not only showed a new rhetoric but also a fundamental shifting on the doer as the activity regarding the economic development. As we knew the local development was a motor of local government itself assisted by local entrepreneur through interaction with existing local resources, it would create a new force as Driving Forces for local economy. The regional development emphasized the endogenous development policy by endeavoring local resources, local institution and physical resources. The objectives that would be reaching in local development are:
1. To develop the job quality for the existing inhabitant
2. To reach local economic stability
3. To develop the labor basis in the diversity of economic resources.
The Strategic Element of Local Development
Prerequisite for the Success of Formulation of Local Development Strategy
The most essential initial step in designing the proper development strategy was socio-economic analysis and development analysis of the existing capacity, so that a region could be easily identify the opportunity, challenge and the available resources. As with this thing, it also needed a clear question on the objective of local development involving sectors and sub-sectors that became the basic for the related region. Some kinds of things that needed a consideration in determining the local development strategy are:
1. To determine sector/sub-sector that had dominant role for local economy.
2. To identify the important relation between domestic and foreign local/regional economy.
3. To interpret the local potential for economic development, stability or its decline.
4. To identify the important possibility for local inhabitant and government official for the developer of local economy.
Conceptual Basis
By the identified sector, sub-sector and product that could be made as a generating motor of local development, it was expected that the local development strategy would be more focused on those superior sector, sub-sector and products that became a specialization of that region. On the other side, investment from outside region could also be increased to develop such identified superior products so that it was expected that it would also spur the local economic development through the creation of new job which also meant that the number of pervaded labor forces so that soon it increased and would create a spurred public capacity of buying and also related sectors (induced investment).
THE STRATEGIC ELEMENTS OF LOCAL DEVELOPMENT
Characteristics of Achievement
- The origin of the Company: Local Company, National Company, International Company.
- Development Sector: Manufacture, Services, Government.
- Scale: Small-scale, medium-scale, large-scale.
- The Form of the Company: New, Exporting, Branch
- Critical Limit: Environmental Pollution, Wage level.
The Method of Development:
Direct assistance to the company.
- Supplier, seller or guarantee exemption
- Labor forces mobilization
- Assistance provider: fund, debt, grant
Assistance of development process: licensing, marketing technique information
The local Organization Form:
- Local government: local government institution in city or regency.
- Local development Company: profitable and non-profitable.
- International Voluntary Organization.
Time Scale:
- Short-scale: 3 – 6 months
- Mid – long scale: 3 – 5 years
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