Title: THE INFLUENCE OF SECTORAL ECONOMIC ACTIVITIES ON INVESTMENT AND LABOR ABSORPTION AND DISTRIBUTION OF COMMUNITY INCOME IN BATAM CITY
Authors: ASMAN ABNUR
Item Type : Thesis (Thesis)
Affiliations: Master of Management Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
The sustainability of development in a region is greatly influenced by investment activities invested in the region concerned. To realize these investment activities, a region, in addition to relying on internal capital potential, must also strive for external capital inflows for investment activities. The occurrence of capital inflows requires investment attraction in the economic sectors within the region concerned. In addition, it is hoped that developing sectoral economic activities will also be able to generalize the capital surplus needed for further investment activities in the region concerned. The results of this study indicate that in the case of Batam City, from the existing economic sectors, those that significantly influence investment activities are the industrial sector, the construction sector, and the transportation sector. Meanwhile, the financial sector and the trade sector did not significantly influence investment activities carried out in Batam City. The influence of the industrial sector is due to its dominance as an economic driver in Batam City. The results of this study are in line with the results of a study conducted by Bappeko Batam using LQ analysis and the Wilkinson Index, which shows that the industrial sector is the most dominant base sector and is a specialization of the Batam City economy. Meanwhile, for the construction and transportation sectors, although they have a significant influence on investment, they are negative, indicating a trade-off relationship between investment and these two sectors. For the construction sector, the negative nature of the relationship between the development of this sector and investment is thought to be caused by the slowness of this sector in providing results or profits for investors. In addition, considering the limited consumers of this sector, it has become a constraint on the acceleration of capital turnover in this sector. Meanwhile, for the transportation sector, the negative relationship between this sector and investment indicates that the development of this sector in Batam City is relatively not optimally integrated with other sectors. In the type of land transportation, high and uncontrolled development in this sector can actually cause congestion problems, which will increase the social costs that must be borne by the regional economy and also cause a decrease in attractiveness. Meanwhile, other sectors, namely the financial sector and the trade sector, show an insignificant influence on investment in Batam City. The insignificant influence of these two sectors is thought to be due to the relatively large economic added value generated by Batam City that is flown out, as well as the relatively high dependence of Batam City on capital supplies from outside Batam. In addition, the relatively low level of public savings compared to the growing investment needs, causing Batam City to become increasingly dependent on capital from outside Batam. The results of this study also show that investment in Batam City does not have a significant effect on labor absorption in Batam City. The insignificant effect of investment on labor absorption is thought to be due to investment activities carried out in Batam City in most economic sectors (such as industry, tourism, transportation and others) being capital intensive. The influence of labor absorption on the formation of added value and income distribution is significant. This is understandable considering that increased labor absorption means an increase in regional aggregate income which will then increase the formation of added value in the region concerned. In addition, increased labor absorption will also reduce the number of unemployed, meaning that more members of the community receive income received by the economy of a region.
Keywords: Balanced Growth is better than Balanced Development
Sources: http://repository.unair.ac.id/35465/