The impact of electricity investment on inter-regional economic development in Indonesia: An Inter-Regional Input-Output (IRIO) approach

Abstract

Electricity is a development priority for low and middle income countries, including Indonesia, especially in the households living in suburban and rural areas. By 2020, Indonesia's electrification ratio has reached 96.71%. However, there were 433 villages that did not have electricity, most of which were located in eastern Indonesia (Papua, West Papua, East Nusa Tenggara, and Maluku). Investment in the electricity sector will drive regional economic growth. This research attempts to figure out the impact of investment in electricity on economy. This study used Indonesian inter-regional Input-Output data. The method used in this study was the Interregional Input-Output (IRIO) model. The analysis shows that electricity impacted not only the territory being built but also other regions in Indonesia. Electricity industry investment in Indonesia have been able to provide a multiplier effect on the economy as many as 3.11. Java region gets the greatest benefit from electricity development in Indonesia. This was rationally acceptable due to the fact that most of the industry was located in this region. This causes a development gap between Java and outside Java. It is necessary to accelerate reallocate several national strategic industries on various islands in Indonesia based on the advantages of each region and to strive for areas that are still "dark" to have electricity.JEL Classification E22; L94; R15

Analysis of Leading Sectors in Improving the Economy East Java Province in 2016-2020

“…Based on the table of the results of the location quotient analysis above, it is known that there are 5 economic sectors that are the base sector of East Java Province. The sectors that have an LQ value of > 1 are (1) the manufacturing industry sector; (2) the water procurement, waste management, waste, and recycling sectors; (3) the large trade and retail sectors, repair and maintenance of automobiles and motorcycles; (4) the accommodation and food and beverage supply sector, and (5) the information and communication sector (Girik Allo et al, 2022). Meanwhile the other 12 sectors are included in the non-base sector or those with an LQ value of < 1, consisting of (1) the agriculture, forestry, and fisheries sectors;…”

Mapping Potential Agriculture Sectors In The SULAMPUA Region As An Impact of Capital City of Nusantara Development

“…This research highlights the economic effects of smart tourism cities, illustrating the convergence of technology and tourism. Allo et al, (2022) research uses interregional input-output (IRIO) data in Indonesia. Analysis shows that the impact of electricity is not only in areas under construction but also in other areas in Indonesia.…”

“…Several researchers have also used the IRIO table in their studies. The research that uses IRIO in the Indonesian case is Allo et al, (2022) for the electricity sector; Ronalia (2021)for the case of Riau Province; and Rahmawan & Angraini (2021) for the case of Lampung Province. Previous studies have not examined key agricultural sectors as having an impact on regional development.…”

Key Industrial Sectors In The Sulampua Area As A Result Of Nusantara Capital City Development

“…Hasil penelitian menunjukkan bahwa sektor ketenagalistikan merupakan sektor kunci di seluruh provinsi kawasan non segitiha emas SULAMPUA. Allo, Dwiputri, and Maspaitella (2022) menggunakan IRIO menemukan bahwa dampak listrik tidak hanya pada wilayah yang sedang dibangun tetapi juga wilayah lain di Indonesia dimana investasi industri ketenagalistrikan di Indonesia mampu memberikan multiplier effect terhadap perekonomian sebesar 3,11 persen. Hal ini sejalan pula dengan temuan Rahmawan and Angraini (2021) dimana sektor pengadaan listrik memiliki nilai pengganda output terbesar baik terhadap perekonomian provinsi Lampung maupun terhadap perekonomian nasional.…”